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FHSA vs. RRSP Home Buyers’ Plan: How GTA First-Time Buyers Can Use Both

/ First-Time Buyers / By

Saving a down payment in the GTA is a big challenge. The good news: first-time buyers have two powerful government programs to speed it up, the First Home Savings Account (FHSA) and the RRSP Home Buyers’ Plan (HBP). Even better, you can use both for the same home.

Here’s how each one works, how they compare, and how to combine them.

The First Home Savings Account (FHSA)

The FHSA launched in 2023 and combines the best features of an RRSP and a TFSA:

  • Contributions are tax-deductible, like an RRSP
  • Qualifying withdrawals to buy your first home are tax-free, like a TFSA, and you never pay them back
  • Contribute up to $8,000 per year, to a lifetime maximum of $40,000
  • Unused room carries forward, up to $8,000, so you could contribute up to $16,000 in a single year
  • The account can stay open for up to 15 years. If you don’t buy a home, you can transfer the balance to your RRSP without using RRSP contribution room

Who qualifies: Canadian residents aged 18 or older (and under 72) who haven’t lived in a home that they or their spouse or common-law partner owned in the current year or the previous four calendar years.

Tip: FHSA room only starts building once you open the account. Even if you can’t contribute much yet, open one as early as possible.

The RRSP Home Buyers’ Plan (HBP)

The HBP lets you borrow from your own RRSP to buy or build a qualifying home:

  • Withdraw up to $60,000 from your RRSP tax-free (the limit rose from $35,000 in April 2024)
  • You must repay it to your RRSP over 15 years. Any annual repayment you miss is added to your taxable income for that year
  • Repayments normally start in the second year after the withdrawal. For withdrawals made between January 1, 2022 and December 31, 2025, the start was temporarily deferred by three years
  • RRSP contributions generally need to stay in your RRSP for at least 90 days before you withdraw them under the HBP

The HBP uses the same first-time buyer test: no home ownership in the current year or the previous four years, with some exceptions.

FHSA vs. HBP at a Glance

  • Maximum per person: FHSA $40,000 lifetime (plus investment growth) · HBP $60,000
  • Tax deduction on contributions: both, since FHSA and RRSP contributions are deductible
  • Repayment: FHSA none · HBP must be repaid over 15 years
  • Investment growth: FHSA growth comes out tax-free for a qualifying home · HBP growth stays inside your RRSP
  • If you don’t buy: FHSA can be transferred to your RRSP · RRSP funds simply remain for retirement

Bottom line: if you can only fund one, the FHSA is usually the better first choice, because the money never has to be paid back. The HBP is a great second layer, especially if you already have RRSP savings.

Using Both Together

You can withdraw from your FHSA and use the HBP for the same home purchase. For a couple where both partners are first-time buyers, that could mean up to:

  • $40,000 × 2 from FHSAs = $80,000, plus any investment growth
  • $60,000 × 2 from the HBP = $120,000
  • Total potential: $200,000 or more toward your down payment and closing costs

That’s a meaningful head start in the Toronto market, where the minimum down payment is 5% of the first $500,000 plus 10% of the portion up to $1.5 million.

Don’t Forget the Land Transfer Tax Rebates

First-time buyers in Ontario can get a refund on part of the provincial land transfer tax. In the City of Toronto, which charges its own municipal land transfer tax, there’s a separate first-time buyer rebate as well. Buying in Durham Region or elsewhere outside Toronto means no municipal land transfer tax at all. See exactly what you’d pay with our Land Transfer Tax Calculator.

A Simple Game Plan for GTA First-Time Buyers

  1. Open an FHSA now, even with a small deposit, to start building room.
  2. Max out your FHSA at $8,000 a year if you can, and claim the deduction.
  3. Add RRSP savings if you have room, so you can use the HBP too. Use your tax refunds to keep saving.
  4. Know your budget: try our Affordability Calculator.
  5. Get pre-approved before you start viewing homes, so you know your price range and can make a strong offer.

We Can Help You Plan

Every buyer’s situation is different. We’ll help you map out your savings, down payment and mortgage strategy, then find the right lender when you’re ready. Read more on our Saving for Your First Home page, or book a free discovery call.

For tax advice on your FHSA or RRSP, speak with an accountant or tax professional. Program details are set by the Canada Revenue Agency and can change; check canada.ca for the latest rules.

This article is for general information only and is not financial, tax or legal advice. Mortgage rules, rates and government programs change, so please speak with a licensed professional about your situation. Trilith Mortgages: Paul Oosh, Mortgage Agent, FSRA Licence #M25002936. Brokerage: Breezeful, FSRA Licence #13470.