Most registered accounts make you choose: deduct now and pay tax later (RRSP), or pay tax now and withdraw free (TFSA). The First Home Savings Account does both. You deduct the contribution from your income, the growth is sheltered, and a qualifying withdrawal for a first home is entirely tax-free. There is no repayment. For anyone eligible and saving for a first home, it is generally the first account to fill.
FHSA basics
- Annual contribution limit: $8,000.
- Lifetime contribution limit: $40,000.
- Unused annual room carries forward, but only $8,000 of carry-forward can be added to any one year — so the most you can contribute in a single year is $16,000.
- Contributions are deductible from income, like an RRSP contribution. You can also carry the deduction forward to claim in a later, higher-income year.
- Qualifying withdrawals for a first home are tax-free and never repaid.
- The account has a maximum lifetime — broadly, it must be closed by the end of the 15th year after opening, or by the end of the year you turn 71, or the year after your first qualifying withdrawal, whichever comes first.
One detail that costs people money: room only starts accruing once you open the account. Unlike a TFSA, you do not accumulate FHSA room retroactively from the year you became eligible. Opening an FHSA and contributing nothing still starts the clock on your $8,000 per year. If you think you might buy a first home within the next decade and you are eligible, opening the account early is close to free optionality.
Who is eligible
You must be a Canadian resident aged 18 or over (and under 71), and a first-time home buyer — broadly meaning you have not lived in a home you or your spouse or common-law partner owned in the current calendar year or the previous four calendar years. The rule looks at your spouse's ownership too, which catches out people who assume their own history is all that counts. Check the CRA's definition against your own circumstances before relying on it.
The Home Buyers' Plan
The HBP is older and works differently. It lets you borrow from your own RRSP to buy a first home:
- You can withdraw up to $60,000 from your RRSP tax-free.
- You must repay it to your RRSP over 15 years, in roughly equal annual instalments.
- Repayments do not require new contribution room — you are restoring what you borrowed.
- Miss an annual repayment and that year's required amount is added to your taxable income for the year.
- Repayment does not begin immediately; there is a grace period before the first instalment is due, and the length of that grace period has been temporarily extended for certain withdrawal years. Confirm the current schedule for your withdrawal year with the CRA rather than assuming.
- RRSP contributions generally must have been in the account for at least 90 days before they can be withdrawn under the HBP.
The HBP is a loan from yourself. The FHSA is not. That single difference drives the whole strategy.
Stacking them: the order that works
You can use both for the same purchase. The sensible sequence:
- Open an FHSA now if you are eligible, even if you cannot contribute yet. It starts your room accruing.
- Fill the FHSA first. It gives the same deduction as an RRSP contribution with no repayment obligation. There is no scenario where an RRSP-for-HBP dollar beats an FHSA dollar, if you have FHSA room available.
- Then use the HBP for anything more you need, up to $60,000 from your RRSP.
- Budget for the HBP repayment — up to $4,000 a year for 15 years if you withdraw the maximum. This is real money out of your cash flow at exactly the point you have just taken on a mortgage.
For a couple where both partners are first-time buyers, both sets of limits apply individually. Two maxed FHSAs plus two full HBP withdrawals is $40,000 + $40,000 + $60,000 + $60,000 = $200,000 of contribution and withdrawal room, before any investment growth. Reaching that requires five years of maximum FHSA contributions and substantial existing RRSP balances, so treat it as the ceiling rather than the plan.
A useful sequencing trick
If you have RRSP room and cash but no FHSA room left this year, you can contribute to your RRSP now, take the deduction, and withdraw it under the HBP later — provided the 90-day rule is satisfied. This effectively converts unused RRSP room into down-payment money with a deduction attached, at the cost of a 15-year repayment obligation.
What can go wrong
- Not opening the FHSA early enough. Room does not backdate. This is the most common and most expensive mistake.
- Over-contributing to the FHSA. Excess contributions attract a penalty tax of 1% per month, the same structure as a TFSA over-contribution. Carry-forward is capped at $8,000, which is where people miscount.
- Missing HBP repayments. Each missed instalment becomes taxable income. Over 15 years, it is easy to lose track — put it in your annual tax checklist.
- Assuming you are a first-time buyer when your spouse's ownership disqualifies you. Read the definition, not a summary of it.
- Holding FHSA money in cash for a purchase that is a decade away — or in volatile assets for a purchase eighteen months away. Match the risk to the timeline.
- Never buying. If you do not end up purchasing a home, FHSA funds can generally be transferred to an RRSP or RRIF without using RRSP room, which is a soft landing. But the money is then locked into retirement rules rather than being freely available.
Working out your own numbers
The variables that matter are your marginal rate (which sets the value of the deduction), how many years you have before purchase, and how much RRSP balance you already have available for the HBP. Our FHSA + HBP stacking optimizer projects the combined down payment across those inputs and shows the annual HBP repayment you would be committing to. Our FHSA vs RRSP comparison covers the narrower question of which account a given dollar should go into.
One closing caution: the deduction is worth your marginal rate, so a contribution made in a low-income year is worth less than the same contribution made in a high-income year. Both the FHSA and RRSP let you carry the deduction forward while contributing now. If you are early in your career and expect your income to rise substantially, contributing now and deducting later is usually the better play.
Frequently asked questions
How much can I contribute to an FHSA in 2026?
$8,000 per year, up to a $40,000 lifetime maximum. Unused room carries forward but only $8,000 of carry-forward can be used in any single year, so the maximum possible contribution in one year is $16,000.
Can I use both the FHSA and the Home Buyers' Plan for the same home?
Yes. They are separate programs and can be combined for the same qualifying purchase. Fill the FHSA first, since it requires no repayment, then use the HBP for any additional amount you need.
Do I have to repay an FHSA withdrawal?
No. A qualifying withdrawal for a first home is tax-free and is never repaid. This is the key difference from the Home Buyers' Plan, which must be repaid to your RRSP over 15 years.
Does FHSA contribution room accumulate before I open the account?
No. Unlike a TFSA, FHSA room only begins accruing once you open the account. This is why it is worth opening one as soon as you are eligible, even if you cannot contribute immediately.
What happens to my FHSA if I never buy a home?
The funds can generally be transferred to an RRSP or RRIF on a tax-deferred basis without using your RRSP contribution room. Withdrawing the money as cash instead makes it taxable income.
Sources
- Canada Revenue Agency — First Home Savings Account (FHSA) — Contribution limits, eligibility, qualifying withdrawals
- Canada Revenue Agency — Home Buyers' Plan (HBP) — Withdrawal limit, repayment schedule and grace period
Written by the Calcova team and last checked against the sources above on 9 September 2026. This is general information about how the rules work, not personal tax or financial advice — see our disclaimer.
Related
FHSA + HBP optimizer · FHSA vs RRSP calculator · RRSP or TFSA first? · The mortgage stress test