Should I contribute to FHSA or RRSP first as a first-time home buyer?

Generally, max out the FHSA first ($8,000/year). FHSA contributions are tax-deductible (like RRSP) but withdrawals for a home purchase are completely tax-free (unlike the RRSP Home Buyers' Plan, which must be repaid). FHSA is essentially a "tax deduction in, tax-free out" account — the best of RRSP and TFSA combined.

Can I use both FHSA and RRSP Home Buyers Plan for my first home?

Yes. You can withdraw up to $40,000 tax-free from your FHSA and up to $60,000 from your RRSP through the Home Buyers' Plan. Combined, that's up to $100,000 per person ($200,000 per couple) in tax-advantaged home purchase funds.

What happens to my FHSA if I never buy a home?

If you don't buy a home within 15 years of opening the FHSA (or by age 71), you can transfer the balance to your RRSP/RRIF tax-free without using RRSP contribution room. It doesn't go to waste — it essentially becomes additional RRSP savings.

Is the RRSP Home Buyers Plan worth it?

The HBP gives you access to $60,000, but you must repay it over 15 years (starting year 2 after withdrawal). If you miss a repayment, that amount becomes taxable income. The FHSA has no repayment requirement. Use the HBP as a supplement after maxing FHSA.

RRSP vs FHSA 2026 | Which Should You Max Out First in Canada?

FHSA vs RRSP: Quick Comparison

Feature	FHSA	RRSP (Home Buyers’ Plan)
Annual contribution limit	$8,000	18% of income (max ~$32,490)
Lifetime limit	$40,000	Based on cumulative room
Tax deduction on contribution	✅ Yes	✅ Yes
Tax-free withdrawal for home	✅ Yes	❌ No (must repay over 15 years)
Repayment required	❌ No	✅ Yes ($60,000 ÷ 15 = $4,000/year)
Maximum withdrawal for home	$40,000	$60,000
Investment growth	Tax-free	Tax-deferred
Carry-forward room	Up to $8,000 (1 year)	Unlimited
Account duration	15 years	Until age 71
If you don’t buy	Transfer to RRSP tax-free	Stays in RRSP

Why FHSA Should Come First

Reason	Details
1. No repayment	FHSA withdrawals for home purchase are permanent — no repayment. RRSP HBP must be repaid over 15 years.
2. Tax-free growth + withdrawal	FHSA = tax deduction in, tax-free out. RRSP HBP = tax deduction in, must repay (or taxed).
3. Doesn’t use RRSP room	FHSA has its own $40,000 limit separate from RRSP
4. Fallback to RRSP	If you don’t buy a home, FHSA transfers to RRSP without using room
5. Can use both	Max FHSA ($40,000) + RRSP HBP ($60,000) = $100,000 per person

Optimal Strategy by Scenario

Scenario 1: Buying in 2-3 Years (Income $70,000)

Priority	Account	Annual Contribution	Tax Refund (~30%)
1st	FHSA	$8,000	$2,400
2nd	RRSP (for HBP)	$4,600	$1,380
3rd	TFSA	Remaining savings	$0 (but tax-free growth)
Total		$12,600+	$3,780

After 3 years: FHSA = $24,000-$26,000. RRSP = $13,800-$15,000. Total for home = $38,000-$41,000 (plus growth).

Scenario 2: Buying in 5 Years (Income $90,000)

Priority	Account	Annual Contribution	Tax Refund (~33%)
1st	FHSA	$8,000	$2,640
2nd	RRSP (for HBP)	$8,200	$2,706
3rd	TFSA	Remaining	$0
Total		$16,200+	$5,346

After 5 years: FHSA = $40,000+ (maxed). RRSP HBP = $41,000+. Total = $81,000+ for home purchase.

Scenario 3: Not Sure If Buying (Income $60,000)

Priority	Account	Annual Contribution	Rationale
1st	FHSA	$8,000	Tax deduction now; if no home, transfers to RRSP
2nd	TFSA	$7,000	Flexible; no penalty for non-home use
3rd	RRSP	Remaining	Long-term retirement savings

RRSP Home Buyers’ Plan Repayment

Year	RRSP HBP Balance	Annual Repayment	What Happens If Missed
Withdrawal year	$60,000	$0	—
Year 2 (repayment starts)	$60,000	$4,000	$4,000 added to taxable income
Year 3	$56,000	$4,000	$4,000 added to taxable income
…	…	$4,000	…
Year 16	$4,000	$4,000	Last payment
Total repaid		$60,000	Or $60,000 in added income tax

If you miss all repayments on a $60,000 HBP withdrawal, you’d pay ~$18,000+ in tax over 15 years. This is why FHSA is strictly better for the home purchase itself.

Couple Strategy (2 People)

Source	Person 1	Person 2	Combined
FHSA	$40,000	$40,000	$80,000
RRSP HBP	$60,000	$60,000	$120,000
Total tax-advantaged	$100,000	$100,000	$200,000

A couple can access up to $200,000 in tax-advantaged funds for a home purchase using both FHSA and HBP.

FHSA + RRSP Growth Projections

Years	FHSA ($8,000/yr, 6%)	RRSP HBP ($8,000/yr, 6%)	Combined
1	$8,480	$8,480	$16,960
2	$17,469	$17,469	$34,938
3	$26,997	$26,997	$53,994
4	$37,097	$37,097	$74,194
5	$40,000 (maxed)	$47,807	$87,807

Tax Refund Reinvestment Strategy

Step	Action
1	Contribute $8,000 to FHSA
2	Receive ~$2,400-$2,640 tax refund
3	Put refund into RRSP (toward HBP)
4	Receive additional ~$720-$870 refund
5	Put that into TFSA
Total deployed from $8,000 contribution	~$11,100-$11,500

Decision Framework

Question	If Yes →	If No →
First-time home buyer?	Open FHSA immediately	FHSA not available; use RRSP/TFSA
Buying within 5 years?	Max FHSA first, then RRSP for HBP	FHSA still worth it (transfers to RRSP if unused)
High income (>$100K)?	Max FHSA + RRSP for maximum deduction	FHSA first, then TFSA
Low income (<$50K)?	Consider TFSA first (low tax bracket = less deduction value)	Save FHSA deduction for higher-income years
Already maxed FHSA?	Move to RRSP (for HBP or retirement)	Max FHSA first
Couple buying together?	Both open FHSA + both use HBP = $200K	One person’s strategy above