ELI5 summary
The two plans side by side
| FHSA qualifying withdrawal | RRSP Home Buyers’ Plan | |
|---|---|---|
| Maximum | Entire balance (up to $40,000 contributed, plus growth) | $60,000 per person |
| Tax on withdrawal | None | None, if repaid on schedule |
| Repayment | Never | 1/15 per year for 15 years |
| Holding period | None for contributions; account must be open | Funds in the RRSP at least 90 days |
| First-time buyer test | Yes, four-year test | Yes, four-year test |
| Same home? | Yes, both plans may be used for one purchase | Yes |
Eligibility for both
Both plans use the same definition of a first-time home buyer: you did not live in a home that you or your spouse or common-law partner owned as your principal residence in the current calendar year or the four preceding calendar years. Both require a written agreement to buy or build a qualifying home in Canada and an intention to occupy it as your principal residence within a year. The HBP additionally requires you to be a resident of Canada from the withdrawal until the purchase, and to complete the purchase by October 1 of the year after the withdrawal.
The HBP has one relaxation the FHSA does not: someone who is not a first-time buyer can still use it to buy or build a home for a related person with a disability.
Order of operations
- Open an FHSA as soon as you qualify, even with $10, so room starts accruing. Contribute up to $8,000 a year and deduct the contributions.
- Contribute to an RRSP with money beyond the FHSA limit, and deduct that too. Note the 90-day rule: money contributed less than 90 days before an HBP withdrawal cannot be deducted, so the last RRSP deposit needs to land at least three months before closing.
- At purchase, withdraw the entire FHSA as a qualifying withdrawal. Nothing to repay. The account must close by the end of the following year; anything left can move to an RRSP tax-free.
- Withdraw up to $60,000 under the HBP, using form T1036 with your RRSP issuer.
- Repay the HBP at 1/15 of the withdrawal each year, starting the second year after the withdrawal. Any instalment you skip is added to your income for that year and taxed.
Worked example
Aisha and Ben, both first-time buyers in Ontario, each earn about $90,000. Over four years each contributes $8,000 a year to an FHSA ($32,000 each, saving roughly $2,372 of tax per person per year at 29.65%) and $10,000 a year to an RRSP. At purchase in 2030 each withdraws the FHSA balance, say $36,000 with growth, tax-free, and $40,000 from the RRSP under the HBP. Their combined down payment is $152,000, of which $80,000 must be repaid to their RRSPs at $2,667 per person per year from 2032 to 2046.
Show the math
HBP annual repayment = withdrawal ÷ 15. Repayments are designated on Schedule 7 of the T1 and do not create a new deduction; they simply restore the RRSP. Missed repayment for a year = (withdrawal − repayments made) ÷ years remaining, added to that year’s income. The FHSA qualifying withdrawal requires a written agreement with an acquisition date before October 1 of the following year; a withdrawal that fails the test is taxable income. Withdrawals from both plans must be made within the timing windows even if the home purchase is delayed.
Traps to avoid
Contributing to the RRSP too late. A deposit within 90 days of the HBP withdrawal is not deductible to the extent it is withdrawn. Plan the final RRSP contribution for the winter before a spring purchase.
Withdrawing the FHSA before the agreement is signed. The written agreement must exist at the time of withdrawal. An early withdrawal is fully taxable.
Forgetting the repayment schedule. The first HBP repayment is due in the second year after withdrawal and is easy to miss. Set a reminder; the missed amount is taxed as income.
Transferring RRSP money into the FHSA to boost it. Allowed, but it uses FHSA room without a second deduction and does nothing that a direct HBP withdrawal would not do more simply.
Couples with one prior owner. If your partner owned the home you lived in during the four-year window, neither of you qualifies as a first-time buyer for a new joint purchase, under either plan.
CRA: What is the Home Buyers' PlanKey takeaways
- FHSA first, RRSP second, HBP at closing: up to $40,000 plus growth tax-free and never repaid, plus $60,000 borrowed from your RRSP.
- Keep the last RRSP deposit at least 90 days ahead of the HBP withdrawal.
- HBP repayments run 15 years starting the second year after withdrawal; skipped amounts are taxed.
- Both plans share the four-year first-time buyer test, including your partner’s ownership.