FHSA vs Home Buyers' Plan (HBP): Which Is Better for Your Down Payment?
The short answer
The First Home Savings Account (FHSA) gives first-time buyers a tax deduction on contributions and tax-free withdrawals for a home — with no repayment required. The RRSP Home Buyers' Plan (HBP) lets you withdraw from your RRSP for a first home tax-free, but you must repay it to your RRSP over 15 years or the shortfall is taxed. For most first-time buyers the FHSA is the more powerful account because it combines the deduction going in with tax-free, no-repayment withdrawals — and you can use both together to boost your down payment.
FHSA vs Home Buyers' Plan (HBP), at a glance
| FHSA | Home Buyers' Plan (HBP) | |
|---|---|---|
| Tax on contributions | Deductible (lowers taxable income), like an RRSP | Deductible when contributed to the RRSP |
| Tax on withdrawal for a home | Tax-free — and no repayment required | Tax-free, but must be repaid to your RRSP |
| Repayment | None | Repay over 15 years; missed amounts are added to income |
| Who qualifies | First-time buyers (per FHSA rules) | First-time buyers using existing RRSP savings |
| Unused for a home? | Can transfer to an RRSP/RRIF tax-free | Money stays in your RRSP for retirement |
| Use them together? | Yes — combine with the HBP on the same purchase | Yes — stack with FHSA and RRSP savings |
Why the FHSA usually wins
The FHSA is unusual because it combines the best features of an RRSP and a TFSA for one purpose: buying a first home. Contributions are tax-deductible (like an RRSP), and qualifying withdrawals to buy a home are completely tax-free with nothing to repay (like a TFSA). The HBP, by contrast, is a loan from your own RRSP — tax-free to withdraw, but you have to put it back over 15 years, and any year you miss the required repayment, that amount is added to your taxable income.
For most first-time buyers, that 'no repayment' feature makes the FHSA the first account to fill, because it permanently reduces your tax bill and leaves your future cash flow free instead of committing you to 15 years of RRSP repayments.
Use both — they stack
You don't have to choose. First-time buyers can combine an FHSA withdrawal with an HBP withdrawal (and any non-registered savings) toward the same down payment, which can meaningfully increase how much you put down and reduce or avoid mortgage-default insurance. A common approach: max the FHSA first for the clean tax treatment, then use the HBP to tap existing RRSP savings if you need more.
- FHSA contributions are deductible in the year you make them (or carried forward), so contributing before you buy can also generate a refund you redirect to your down payment.
- HBP repayments start the second year after withdrawal — budget for them so a missed repayment doesn't quietly become taxable income.
- If you never buy, FHSA savings can roll into your RRSP/RRIF tax-free, so opening one early is low-risk.
Choose FHSA if…
- You want a tax deduction going in AND tax-free money out
- You don't want a 15-year repayment obligation
- You're starting your down-payment savings from scratch
- You want flexibility if your plans change (roll to RRSP)
Choose Home Buyers' Plan (HBP) if…
- You already have meaningful RRSP savings to tap
- You want to boost your down payment beyond your FHSA
- You're comfortable repaying the withdrawal over 15 years
- You're combining sources to reach 20% down
Key takeaways
- FHSA = deduction in + tax-free out + no repayment. It's usually the first account to fill.
- HBP = a tax-free loan from your own RRSP that you must repay over 15 years or be taxed on the shortfall.
- You can use the FHSA and HBP together on the same purchase to grow your down payment.
- Open an FHSA early even if you're unsure — unused savings can roll into an RRSP tax-free.
Not sure which is right for you?
Frequently asked questions
Can I use both the FHSA and the Home Buyers' Plan?
Yes. First-time buyers can combine an FHSA withdrawal and an HBP (RRSP) withdrawal toward the same home, along with any other savings. Many buyers fill the FHSA first for its cleaner tax treatment, then use the HBP to access existing RRSP funds.
Do I have to repay an FHSA withdrawal?
No. Qualifying FHSA withdrawals to buy a first home are tax-free with no repayment required — a key advantage over the HBP, which must be repaid to your RRSP over 15 years.
What happens to the HBP if I don't repay it?
Each year you're required to repay a portion to your RRSP. If you don't, that year's required repayment is added to your taxable income, so you effectively lose the tax shelter on that amount.
What if I open an FHSA but never buy a home?
You can transfer the FHSA balance to an RRSP or RRIF on a tax-free basis (subject to the account's rules), so the savings aren't wasted — they continue to grow for retirement.
Related comparisons
General information for Ontario, not legal, tax or financial advice. Figures describe how each option works, not current rates or prices. Confirm specifics with a licensed professional before you decide.