Morty's FHSA & RRSP Home Buyers' Super Guide
Everything you need to know about the First Home Savings Account and RRSP Home Buyers' Plan in 2026 — the definitive Canadian guide.
FHSA vs. RRSP Home Buyers' Plan — At a Glance
Two powerful programs. Here's how they stack up.
Welcome! Canada gives first-time home buyers two incredible tax-advantaged tools to save for a down payment. Used together, they're the most powerful combo on the planet for building your down payment. Let Morty walk you through everything.
| Feature | FHSA | RRSP HBP | Both Together |
|---|---|---|---|
| Max withdrawal | $40,000 + growth | $60,000 per person | $100,000+ per person |
| Tax deduction? | Yes — on contributions | Yes (when originally contributed to RRSP) | Both deductible |
| Tax-free growth? | Yes | Yes (inside RRSP) | Yes |
| Tax-free withdrawal? | Yes — permanently | Temporarily — must repay over 15 years | FHSA free; HBP must repay |
| Must repay? | No | Yes — 1/15 per year | Only the HBP portion |
| Annual limit | $8,000/year | Limited by RRSP room | $8K FHSA + RRSP room |
| Lifetime cap | $40,000 | $60,000 withdrawal cap | $100,000 |
| For couples | $80,000 combined | $120,000 combined | $200,000 combined |
Morty says: A couple maxing out both programs can pull together up to $200,000 in tax-advantaged funds for a down payment. That's 20% down on a million-dollar home. Not bad for a couple of savings accounts!
What Is the FHSA?
The new kid on the block — and it's a game-changer
The First Home Savings Account (FHSA) launched in April 2023 and is the single best tool for first-time buyers to save for a down payment. It combines the best features of an RRSP and a TFSA: contributions are tax-deductible, growth is tax-free, and withdrawals for a home purchase are completely tax-free. No repayment required. Ever.
Tax-Deductible
Every dollar you contribute reduces your taxable income — just like an RRSP. At a 33% marginal rate, contributing $8,000 saves you $2,640 in taxes.
Tax-Free Growth
Investments inside your FHSA grow completely tax-free — interest, dividends, capital gains. Nothing is taxed as long as the account is open.
Tax-Free Withdrawal
When you withdraw to buy your first home, you pay zero tax on the full amount — contributions AND growth. No repayment schedule. The money is yours.
You must meet all of these criteria:
- Canadian resident — you must be a resident of Canada.
- Age 18+ — you must be at least 18 (or the age of majority in your province). The account must be opened before December 31 of the year you turn 71.
- First-time home buyer — you (or your spouse/common-law partner) must not have owned a home that you lived in as your principal residence at any time in the year the account is opened or the preceding four calendar years.
- Valid SIN — you need a valid Social Insurance Number.
Note: The "first-time buyer" definition resets after 4 years of not owning a home. If you owned a home 5+ years ago and sold it, you may qualify again.
Morty says: The FHSA is basically a cheat code. Tax deduction going in, tax-free growth, tax-free coming out. And if you don't buy? Just roll it into your RRSP penalty-free. There's literally no downside to opening one today — even if you're not sure you'll buy.
What Is the RRSP Home Buyers' Plan?
The classic — borrow from your future self, interest-free
The Home Buyers' Plan (HBP) lets you withdraw up to $60,000 from your RRSP tax-free to buy or build a qualifying home. The catch? You have to pay it back over 15 years — starting the second year after your withdrawal. If you miss a repayment, that amount gets added to your taxable income for the year.
How It Works
Withdraw: Up to $60,000 per person ($120,000 for a couple) from your RRSP, tax-free.
Use it: Must be used to buy or build a qualifying home within one year of withdrawal (or by October 1 of the year after).
Repay it: 1/15th of the total each year, starting the 2nd year after withdrawal. Repayments go back into your RRSP.
The Gotchas
Must repay: Unlike the FHSA, this is a loan from yourself. Miss a payment and the CRA adds it to your income.
90-day rule: RRSP contributions must sit in your account for at least 90 days before you can withdraw them under the HBP.
Opportunity cost: Money withdrawn isn't growing tax-free in your RRSP while you repay it over 15 years.
Morty says: The HBP is a great way to boost your down payment — but don't forget about the repayment. $4,000 a year for 15 years adds up. Budget for it, or it becomes a surprise tax bill every April. Morty has seen too many buyers forget!
Which Should You Choose?
FHSA vs. HBP vs. using both — depends on your situation
Scenario 1: Young professional, 3–5 years out
Best move: FHSA first, HBP later.
Open an FHSA immediately and max it out at $8,000/year. You get the tax deduction now, tax-free growth for years, and no repayment obligation. Meanwhile, keep building your RRSP normally. When you're ready to buy, withdraw from both.
Scenario 2: Ready to buy this year
Best move: HBP is your heavy hitter.
If you already have a healthy RRSP, the HBP gives you up to $60,000 immediately. Open an FHSA too and contribute what you can (even $8,000 counts) — but the HBP will be your main source for the down payment. Remember the 90-day rule for RRSP contributions.
Scenario 3: High income, want maximum tax savings
Best move: Max both programs.
At a 50%+ marginal rate, every dollar contributed to the FHSA saves you 50+ cents in tax. Contribute $8,000/year to the FHSA plus your normal RRSP contributions. At purchase time, withdraw from both. The FHSA is free money; the HBP is a 15-year interest-free loan. Use both.
Scenario 4: Couple buying together
Best move: Each partner opens their own FHSA + uses their own HBP.
Each person can withdraw $40,000+ from FHSA and $60,000 from HBP = $100,000+ each, $200,000+ combined. That's a 20% down payment on a million-dollar home from tax-advantaged accounts alone. Coordinate your strategies.
Morty's golden rule: Open the FHSA immediately, even if you contribute $0 this year. The carry-forward clock starts ticking the moment you open it. Future you will thank present you. Then layer in the HBP when you're ready to buy. That's the max-power combo.
Step-by-Step: Using the FHSA
From opening your account to getting the keys
Open an FHSA (Today!)
Go to your bank, credit union, or online brokerage and open an FHSA. You'll need your SIN and ID. Most major institutions offer them: Wealthsimple, Questrade, TD, RBC, BMO, Scotiabank, CIBC, National Bank. The sooner you open it, the sooner carry-forward room starts accumulating.
Contribute Each Year (Up to $8,000)
Set up automatic contributions — even $500/month gets you to $6,000/year. You can carry forward up to $8,000 of unused room to the next year, but only after the account is open. Max annual contribution (with carry-forward) is $16,000.
Invest Your Contributions
Don't just let the money sit in cash! Choose investments based on your timeline. Buying in 1–2 years? GICs or high-interest savings. 3–5 years? Balanced ETFs. 5+ years? A growth-oriented portfolio. Everything grows tax-free.
Claim Your Tax Deduction
On your tax return, claim your FHSA contributions as a deduction (like RRSP contributions). Your institution will issue a tax slip. You can also defer the deduction to a future year when your income is higher — the contribution room is used, but the deduction carries forward.
Request a Qualifying Withdrawal
When you're ready to buy, fill out Form RC725 (Request to Make a Qualifying Withdrawal from your FHSA). You must have a written agreement to buy or build a qualifying home. You must be a first-time home buyer and a Canadian resident.
Use the Funds for Your Home Purchase
The withdrawal is completely tax-free. Use it for your down payment, closing costs, or any home-buying expense. You must buy or build the home by October 1 of the year after your withdrawal. Close the FHSA within one year of your first qualifying withdrawal.
Morty says: Pro move — if your employer offers RRSP matching, contribute to get the match, then put extra savings into the FHSA. Don't leave free employer money on the table, but the FHSA's no-repayment perk makes it the better home-buying vehicle.
Step-by-Step: Using the HBP
Borrow from your RRSP and repay over 15 years
Check Your RRSP Balance & Contribution Room
Log in to your CRA My Account to see your RRSP balance and remaining room. Remember: you can withdraw up to $60,000, but only what's actually in your RRSP. Contributions must be in the account for at least 90 days before withdrawal.
Top Up If Needed (90-Day Rule!)
If you want to maximize your HBP withdrawal, contribute to your RRSP at least 91 days before you plan to withdraw. This also gives you a tax deduction for the contribution year. Plan ahead — if you want to withdraw in September, contribute by June at the latest.
Fill Out Form T1036
Complete CRA Form T1036 (Home Buyers' Plan Request to Withdraw Funds from an RRSP). Submit it to your RRSP issuer (bank/brokerage). They'll release the funds without withholding tax.
Buy or Build Your Home
You must buy or build a qualifying home by October 1 of the year after withdrawal. The home must become your principal residence within one year of purchase.
Start Repaying (Year 2 After Withdrawal)
Repayment starts the second year after your withdrawal. If you withdrew in 2026, your first repayment is due with your 2028 tax return (filed spring 2029). Each year, repay at least 1/15th of the total withdrawn back into your RRSP.
Designate Repayments on Your Tax Return
When you contribute to your RRSP during a repayment year, you choose whether to designate the contribution as an HBP repayment (not tax-deductible) or a regular RRSP contribution (tax-deductible). You can't double-dip. If you don't designate enough as repayment, the shortfall is added to your taxable income.
Morty says: The repayment is the part people trip on. Set up an automatic monthly transfer into your RRSP for 1/12th of your annual repayment. If you owe $4,000/year, that's $333/month. Automate it and forget it — don't let a missed repayment become a tax surprise.
Money Math: How Much Can You Actually Save?
Interactive calculators to model your strategy
FHSA Growth Calculator
See how your FHSA grows over time with tax-free compounding. Adjust the sliders to match your situation.
$8,000/yr
5 years
5%/yr
FHSA Balance
$46,415
Tax-free withdrawal
Tax Saved
$13,200
On contributions (est. 33%)
Total Benefit
$19,615
Growth + tax savings
HBP Repayment Impact
Understand what your HBP repayment looks like — and what happens if you miss a year.
$35,000
30%
Annual Repayment
$2,334
Back into RRSP each year
Repayment Period
15 years
Starting year 2 after purchase
Miss a Year?
$700
Added to taxable income
Combined Strategy vs. Doing Nothing
Compare using FHSA + HBP together versus saving in a regular TFSA with no tax perks.
$80,000
5 years
FHSA + HBP Combined
The max-power strategy
$105,000
+$13,200 tax savings
FHSA Only
No RRSP involvement
$45,000
+$13,200 tax savings
TFSA Only (No Programs)
Same savings, no tax perks
$45,000
$0 tax savings
Combined strategy advantage over TFSA-only
$73,200
At your 33% marginal rate
Morty says: The numbers don't lie — the combined strategy beats plain savings by tens of thousands of dollars. The tax deduction alone is worth more than most people's annual vacation budget. Open that FHSA today!
Deadlines, Tax Rules & 2026 Updates
Don't miss these dates — they matter
| Deadline | FHSA | RRSP / HBP |
|---|---|---|
| Contribution deadline | December 31 of the tax year | 60 days after year-end (usually March 1) |
| 90-day rule | No 90-day rule for FHSA | Contributions must sit 90 days before HBP withdrawal |
| Purchase deadline | October 1 of the year after withdrawal | October 1 of the year after withdrawal |
| Repayment start | No repayment required | 2nd year after withdrawal |
| Account closure | 15 years after opening, or age 71, or 1 year after first withdrawal | N/A (RRSP stays open) |
| Carry-forward | Up to $8,000 unused room carries forward | Full RRSP room carries forward indefinitely |
Morty says: The number-one deadline mistake? Forgetting that FHSA contributions are due December 31 (not March 1 like RRSPs). If you want the 2026 deduction, get your FHSA contribution in before New Year's Eve. Don't wait for tax season.
Common Mistakes & How to Avoid Them
Morty has seen it all — don't be that person
Not opening an FHSA early enough
Carry-forward room only starts accumulating AFTER you open the account. If you wait 3 years to open one, you've lost 3 years of carry-forward. Open it today, even with $0.
Morty: "The best time to open an FHSA was yesterday. The second best time is today."
Leaving FHSA contributions in cash
An FHSA sitting in a savings account earning 2% when you could be earning 5–8% in a diversified ETF is leaving thousands on the table. If you're 3+ years from buying, invest it.
Morty: "Cash is for emergencies. Your FHSA is for building wealth. Put it to work!"
Forgetting the RRSP 90-day rule
You can't contribute to your RRSP and immediately withdraw under the HBP. Contributions must sit for 90 days. If you need the money in September, contribute by June.
Morty: "90 days is 90 days. The CRA doesn't care about your closing date."
Missing HBP repayments
If you don't repay at least 1/15th of your HBP withdrawal each year, the CRA adds the shortfall to your taxable income. On a $60K withdrawal at 33%, that's a $1,320 tax hit per missed year.
Morty: "Set up auto-transfers. Your RRSP repayment shouldn't depend on your memory."
Contributing to FHSA when you're not eligible
If you or your spouse owned a home as your principal residence in the last 4 years, you don't qualify. Over-contributions face penalties. Check your eligibility first.
Morty: "The CRA will find out. They always find out."
Not claiming the FHSA deduction strategically
You can defer your FHSA deduction to a higher-income year for a bigger tax break. Contributing $8K at a 20% rate saves $1,600, but at 33% it saves $2,640. Same money, different timing.
Morty: "Patience pays — literally. Defer the deduction if your income is climbing."
Withdrawing from FHSA for non-qualifying purposes
If you withdraw FHSA funds and DON'T buy a qualifying home, the withdrawal is added to your taxable income. This defeats the entire purpose. Only withdraw when you have a signed agreement.
Morty: "The FHSA isn't a piggy bank. Break it open only when you've found your home."
Not using both programs together
Many buyers use the FHSA OR the HBP, not realizing they can use both simultaneously. A single person can access $100,000+ in tax-advantaged funds. Don't leave money on the table.
Morty: "Using just one program is like eating only half a sandwich. Why would you do that?"
Your Action Plan + Beast Toolkit
Your 30-day checklist and all the tools you need
30-Day Action Plan
Week 1
- Open an FHSA at your bank or brokerage
- Check your RRSP balance on CRA My Account
- Note your RRSP contribution room
Week 2
- Set up automatic FHSA contributions ($667/month = $8,000/year)
- Choose investments inside your FHSA based on your timeline
- Review your budget — how much can you save monthly?
Week 3
- Run the Affordability Calculator to find your max purchase price
- Take the Mortgage Matcher quiz to find your ideal mortgage type
- Check the Rate Radar for current market conditions
Week 4
- Read the First-Time Buyer Guide for the full buying process
- Talk to a mortgage broker about pre-approval
- Bookmark this guide and review it before tax season
Your Beast Toolkit
Mortgage Calculator
Calculate payments, amortization, and total interest
Affordability Calculator
Find your max purchase price based on income
Mortgage Matcher
Find the best mortgage type for your situation
Rate Radar
Live rate data and how rates work
First-Time Buyer Guide
The complete guide to buying your first home
Mortgage Dictionary
Look up FHSA, HBP, GDS, TDS, and more
Mortgage Checklists
Shopping and document checklists with progress
Closing Cost Calculator
Land transfer tax and closing costs by province
You're armed and dangerous! You now know more about FHSA and HBP than 99% of Canadians. Open that FHSA, build your strategy, and come back to Morty's tools whenever you need to crunch numbers. You've got this — Morty believes in you!
Ready to Start Saving Smarter?
Open your FHSA today, run the numbers with Morty's calculator, and take the Mortgage Matcher quiz to find the right mortgage for when you're ready.
Disclaimer: This guide is for educational purposes only and does not constitute financial, tax, or legal advice. FHSA and HBP rules may change — always verify current details with the CRA, your financial institution, or a qualified tax professional. Calculators provide estimates only. Morty is a mascot, not a licensed financial advisor.