Editor's note, October 6, 2026: this article was reviewed and rewritten in our accuracy check. An earlier version contained an incorrect description of the HBP grace period, an investment-return projection and example savings figures we could not support; they have been removed or replaced with figures from the sources listed at the end of the article.
Both programs let a first-time buyer put tax-sheltered savings toward a down payment, and the CRA lets you use both on the same home. The difference is what happens after you buy: money from a First Home Savings Account (FHSA) is yours to keep, while money from the RRSP Home Buyers' Plan (HBP) has to be paid back into your RRSP.
The FHSA in one paragraph
Contribute up to $8,000 a year, $40,000 in total, and deduct the contributions from your income. Growth is not taxed, and a qualifying withdrawal to buy your first home is tax-free and never repaid. You can carry forward up to $8,000 of unused room. The account can stay open for up to 15 years or until the end of the year you turn 71. If you never buy, you can transfer the balance to your RRSP without using RRSP room.
The HBP in one paragraph
Withdraw up to $60,000 from your RRSPs without tax being withheld, then repay it over 15 years. For withdrawals made in 2026 or later, repayment starts in the second year after the withdrawal; withdrawals made from 2022 to 2025 got a temporary grace period and start in the fifth year. Each year's minimum repayment is one-fifteenth of the total; any part you don't repay is added to your taxable income that year.
Side by side
- Tax deduction when you put money in: FHSA yes (new contributions); HBP no new deduction, because the RRSP contributions were already deducted when you made them.
- Tax on the way out for a first home: none for either.
- Repayment: FHSA none; HBP 15 years.
- Maximum per person: FHSA $40,000 of contributions plus growth; HBP $60,000.
- If you don't buy: FHSA balance can move to your RRSP; HBP not relevant.
- Retirement impact: FHSA none; HBP money is out of your RRSP until you repay it, so it stops compounding there.
Which to use first
For most people, the FHSA. Every dollar you withdraw from it is permanent down-payment money, while every HBP dollar becomes a 15-year repayment obligation on top of your new mortgage. The HBP earns its place when you already have RRSP savings and need a larger down payment than the FHSA alone can give, for example to reach 20% down and avoid mortgage default insurance, or to meet the higher minimum on a more expensive home.
Why the size of the down payment matters
With less than 20% down, your mortgage must be insured, and the premium is added to the loan. CMHC's premium is 4% of the loan with 5% down and 3.1% with 10% down. In Ontario, 8% provincial sales tax on the premium is due in cash at closing. Homes priced at $1.5 million or more cannot be insured, so they need at least 20% down.
Timing your contributions and withdrawals
- Open the FHSA early. Room only starts to build once the account exists.
- Withdraw on time. A qualifying FHSA withdrawal must be made no more than 30 days after you acquire the home, so plan contributions and the withdrawal around your closing date.
- Keep short-term money in low-risk holdings. If you plan to buy within a year or two, a market drop just before closing can shrink your down payment.
- Know the deadline: you generally need a written agreement to buy or build the home before you withdraw, and the CRA sets dates by which you must acquire it. Check the CRA withdrawal pages listed below before you make the request.
Frequently asked questions
Can I use both programs on the same home?
Yes. The CRA allows an HBP withdrawal and a qualifying FHSA withdrawal for the same home, as long as you meet the conditions of each when you withdraw. You cannot repay HBP withdrawals into an FHSA.
Can my parents contribute to my FHSA?
They can give you money, which you then contribute; only you can claim the deduction for contributions to your own FHSA.
Do I have to live in the home?
Yes. Both programs require that you intend to occupy the home as your principal place of residence within a year of buying or building it.
Is there another first-time buyer credit?
Yes: the home buyers' amount, a non-refundable federal credit on up to $10,000, worth up to $1,500. See our guide to every first-time buyer incentive in Ontario for the land transfer tax refunds and the new-home GST/HST rebates.
This article is general information, not tax advice. Ask Zara, Summitly's AI virtual agent, to walk through the steps, and confirm your plan with your financial institution or a tax professional.
