RRSP vs. FHSA vs. Home Buyers' Plan: How They Stack Up

Key takeaways

• The RRSP Home Buyers' Plan (HBP), First Home Savings Account (FHSA), and RRSP itself are three tools for first-time buyer savings — they serve different purposes and have different strengths
• FHSA: best for dedicated first-home savings — contributions deductible, withdrawals tax-free, no repayment required
• HBP: best for buyers who already have RRSP savings — borrow up to $60,000 (2024+), repay over 15 years
• Combine both: use FHSA first, HBP to supplement — maximum combined withdrawal of $100,000 ($40,000 FHSA + $60,000 HBP)
• Using RRSP for investment growth, then HBP: good if investments have significant gains you can shelter before withdrawal

For first-time homebuyers, three registered accounts are now available: the FHSA (introduced 2023), the RRSP Home Buyers' Plan (longstanding), and the RRSP itself. Each has different tax treatment, withdrawal rules, and contribution mechanics. Understanding the differences is essential before deciding which to prioritize.

FHSA: the strongest option for dedicated savings

The FHSA was specifically designed for first-time home savings. Contributions up to $8,000 per year ($40,000 lifetime) are deductible from income — the same benefit as an RRSP. But unlike an RRSP withdrawal under the HBP, qualifying FHSA withdrawals for a first home are permanently tax-free with no repayment required. For a buyer starting from scratch, the FHSA is the best vehicle for every dollar earmarked for a home purchase.

HBP: best when you already have RRSP savings

If you have significant RRSP savings that were intended partly for retirement and partly for a home, the HBP allows you to redirect up to $60,000 (since 2024) toward a purchase and repay it over 15 years. The repayment obligation is the key drawback — missing a year adds to income. But for buyers with a large RRSP and a clear repayment plan, the HBP can significantly reduce the mortgage needed.

Combining FHSA and HBP

The FHSA and HBP can both be used for the same home purchase. A buyer with $40,000 in an FHSA and $60,000 available in their RRSP can withdraw both — $100,000 total — for the purchase. The $40,000 FHSA portion is tax-free with no repayment; the $60,000 HBP portion must be repaid to the RRSP over 15 years. This combination is the most powerful first-time buyer strategy available under current rules.