RRSP vs. FHSA: Which is Best for Your First Home in 2026?
Your complete guide to understanding the Registered Retirement Savings Plan (RRSP) Home Buyers' Plan (HBP) and the First Home Savings Account (FHSA) for your down payment.
The First Home Savings Account (FHSA)
Key FHSA Features
Annual Contribution Limit: $8,000.
Lifetime Contribution Limit: $40,000.
Tax-Deductible Contributions: Yes.
Tax-Free Withdrawals for Home Purchase: Yes.
The First Home Savings Account (FHSA) is a registered savings plan designed specifically to help Canadians save for their first home. It combines the features of a Registered Retirement Savings Plan (RRSP) and a Tax-Free Savings Account (TFSA).Your contributions are tax-deductible, and qualifying withdrawals to buy your first home are non-taxable.
To open an FHSA, you must be a Canadian resident, at least 18 years old, and a first-time home buyer. A first-time home buyer is someone who has not owned a home in the calendar year the account is opened or in the preceding four calendar years.
FHSA Contribution Rules for 2026
You can contribute up to $8,000 per year to your FHSA, with a lifetime limit of $40,000. Unused contribution room can be carried forward to the next year. For example, if you contribute $5,000 in 2025, your contribution limit in 2026 would be $11,000. However, you can only carry forward a maximum of $8,000 of unused contribution room. Unlike RRSPs, contributions made in the first 60 days of the year are not deductible on the previous year's tax return.
Tax-Free Growth
Investment earnings within the FHSA grow tax-free.
No Repayment Required
Withdrawals for a qualifying home purchase do not need to be repaid.
15-Year Lifespan
The account can remain open for up to 15 years.
Using Your FHSA Funds
To make a qualifying withdrawal, you must have a written agreement to buy or build a qualifying home. If you don't use the funds to buy a home, you can transfer them to your RRSP or a Registered Retirement Income Fund (RRIF) tax-free.Otherwise, withdrawals will be considered taxable income.
The RRSP Home Buyers' Plan (HBP)
The Home Buyers' Plan (HBP) allows first-time home buyers to withdraw from their Registered Retirement Savings Plans (RRSPs) to buy or build a qualifying home. While an RRSP is primarily for retirement savings, the HBP provides a way to use those funds for a down payment.
Key HBP Features
Withdrawal Limit: Up to $60,000 per person.
Tax-Free Withdrawal: Yes, but it's a loan that must be repaid.
Repayment Period: 15 years.
To be eligible for the HBP, you must be a first-time home buyer and the funds must have been in your RRSP for at least 90 days before you can withdraw them. If you and your spouse or common-law partner are both first-time home buyers, you can each withdraw up to $60,000 for a combined total of $120,000.
HBP Repayment Rules
The amount you withdraw under the HBP must be repaid to your RRSP over a 15-year period. If you don't make the minimum annual repayment, that amount will be added to your taxable income for the year.
| Feature | FHSA | RRSP Home Buyers' Plan |
|---|---|---|
| Annual Contribution Limit | $8,000 | Up to 18% of previous year's earned income (up to a maximum). |
| Lifetime Contribution/Withdrawal Limit | $40,000 Contribution Limit | $60,000 Withdrawal Limit |
| Tax-Deductible Contributions | Yes | Yes |
| Tax-Free Withdrawals for Home | Yes, and no repayment required | Yes, but must be repaid |
Which is Right for You?
Should I use the FHSA or the RRSP HBP?
The best choice depends on your individual circumstances. The FHSA is often a great starting point for those beginning to save for a home, as it offers tax-deductible contributions and tax-free withdrawals without the need for repayment.
Can I use both the FHSA and the RRSP HBP?
Yes, you can use both the FHSA and the HBP for the same qualifying home purchase. This can be a powerful strategy to maximize your down payment. A couple could potentially access a significant amount for their down payment by combining both programs.
Ready to Start Saving for Your First Home?
Explore your options and open an account today to start your journey to homeownership.
Learn More About the FHSA →What if I already have a significant amount saved in my RRSP?
If you have a substantial amount in your RRSP, using the HBP can give you immediate access to a larger down payment. You can also consider transferring some of your RRSP funds to an FHSA, but keep in mind that these transfers are not tax-deductible.
What if I'm not sure if I'll buy a home?
The FHSA offers flexibility if your plans change. If you don't buy a home within 15 years, you can transfer the funds to your RRSP or RRIF without any immediate tax consequences. This makes the FHSA a low-risk savings option.