The FHSA, TFSA and RRSP each shelter investment growth from tax, but they differ in when the tax break arrives and what the money can be used for. For a first-time buyer, the question is usually which one gets the next dollar. This page compares the three and sets out a contribution order by situation and by timeline. How the FHSA itself works is covered in the FHSA guide, and every FHSA topic is listed in the FHSA guides directory.
Quick comparison
| Feature | FHSA | TFSA | RRSP |
|---|---|---|---|
| Contributions deductible | Yes | No | Yes |
| Growth inside the account | Not taxed | Not taxed | Tax-deferred |
| Withdrawals | Tax-free for a qualifying first home; otherwise taxable | Tax-free for any purpose | Taxable, except HBP and LLP withdrawals that are repaid |
| Room added each year (2026) | $8,000 | $7,000 | 18% of prior-year earned income, up to $33,810 |
| Lifetime cap | $40,000 | None | None |
| When room starts | The year you open your first FHSA | Age 18, or 2009 if later, with or without an account | Once you have earned income and file a return |
| Unused room | Carries forward, capped at $8,000 | Carries forward in full | Carries forward in full |
| Room back after a withdrawal | Taxable withdrawals only, the following year | Yes, the following January 1 | No |
| Account ends | Its maximum participation period (ends December 31 of the year of the 15th anniversary of opening, or sooner) | Never | Converted by the end of the year you turn 71 |
Two FHSA details drive most of the ordering decisions below. Its room only exists once the account is open (see when to open an FHSA), and if you never buy, a direct transfer to an RRSP or RRIF is not taxed and uses no RRSP room (see what happens to your FHSA if you never buy).
Contribution order by situation
These orders describe how the accounts’ rules line up for each case; they are not a recommendation for any one person.
Buying a first home, lower marginal rate. FHSA first: its deduction is small at a low rate, but the qualifying withdrawal is still tax-free and the deduction can be carried to a later, higher-income year. The TFSA next, for flexible savings. The RRSP last, since its deduction is worth more in a later, higher-income year.
Buying a first home, higher marginal rate. FHSA first. The RRSP next, both for the larger deduction and because RRSP savings can fund a Home Buyers’ Plan withdrawal of up to $60,000. The TFSA with what is left.
Not planning to buy, lower marginal rate. The TFSA is often first, for flexibility and because its withdrawals don’t count as income. If you qualify, an FHSA still offers a deduction and ends up in your RRSP by transfer if unused.
Not planning to buy, higher marginal rate. The RRSP and an FHSA both give a deduction; the FHSA’s $40,000 can later move directly into an RRSP without using RRSP room. The TFSA after that.
FHSA or TFSA: by buying timeline
| Buying timeline | Order the rules favour | Why |
|---|---|---|
| Within a year | FHSA, even for a short stay | There is no minimum holding period, so you can contribute, deduct and make a qualifying withdrawal in the same year |
| Two to five years | FHSA, then TFSA | Deduction plus tax-free growth; a year of unused room carries forward |
| Five to fifteen years | FHSA, then RRSP or TFSA | A longer horizon allows a growth-oriented mix inside the FHSA |
| Unsure | Open the FHSA to start its room; fund the TFSA for flexibility | The FHSA’s RRSP fallback limits the downside |
| Not buying | TFSA or RRSP depending on income | FHSA withdrawals not used for a home are taxable, unless transferred |
Because FHSA room starts in the year you open the account, many people open one as soon as they qualify even when the TFSA gets their money first. How much the FHSA could grow over each timeline is easier to see in the FHSA calculator, and what to hold for each horizon is on FHSA investment options.
Tax impact
The FHSA and RRSP give the same deduction for the same contribution; the TFSA gives none. On a $8,000 contribution:
| Marginal rate | FHSA deduction | RRSP deduction | TFSA |
|---|---|---|---|
| 25% | $2,000 | $2,000 | $0 |
| 30% | $2,400 | $2,400 | $0 |
| 40% | $3,200 | $3,200 | $0 |
The gap opens on the way out. Money put toward a home through each account:
| Account | Tax saved going in (30% to 40%) | Tax coming out for the home | What follows |
|---|---|---|---|
| FHSA | $12,000 to $16,000 on $40,000 | None | Nothing to repay |
| RRSP through the HBP | The same, on the same amount | None if repaid | 15 years of repayments; skipped ones are taxed |
| TFSA | None | None | Room returns the next January 1 |
Refund reinvestment
When tax has already been taken off your pay, a deduction comes back as a refund that can be put to work too. For example, at a 30% rate, a $8,000 FHSA contribution returns about $2,400. Putting that refund into an RRSP returns about $720 more the following spring, which could go into a TFSA.
Maxing all three
Someone with the room and the cash to fill all three accounts this year would put in $8,000 (FHSA) + $33,810 (RRSP dollar limit) + $7,000 (TFSA) = $48,810, assuming earned income high enough for the full RRSP limit and no pension adjustment.
Special situations
- You already own a home. You can’t open an FHSA unless you meet the first-time buyer test; the qualifying home and first-time buyer rules explain it, and when your partner owns a home covers a partner’s ownership.
- You are a couple. Each partner has separate room in all three accounts. How two FHSAs combine for one purchase is on the FHSA for couples.
- You are new to Canada. FHSA room starts when you open the account once resident, while TFSA room starts in the year you become resident; see the FHSA for newcomers.
- You aren’t sure the FHSA is worth it. See is an FHSA worth opening.
Related guides
Sources
The figures and rules on this page come from these sources, last checked against them between August 29, 2026 and September 17, 2026. How we check facts.
- Canada Revenue Agency: FHSA: Participating in your FHSAs
- Canada Revenue Agency: MP, DB, RRSP, DPSP, ALDA, TFSA limits, YMPE and the YAMPE
- Canada Revenue Agency: How contributions affect your RRSP deduction limit
- Canada Revenue Agency: FHSA: Definitions for FHSAs
- Canada Revenue Agency: Closing your FHSA
- Canada Revenue Agency: RRSP: The Home Buyers' Plan
- Justice Laws (Canada): Income Tax Act