FHSA vs RRSP Home Buyers Plan: which account to use first

The FHSA wins. Not close.

Both accounts let you pull money out tax-free for your first home. But the FHSA doesn't make you pay it back. The Home Buyers Plan does - $25,000 borrowed means $1,667 you have to put back into your RRSP every year for 15 years. Miss a payment and CRA taxes it as income.

The FHSA gives you the same RRSP tax deduction upfront, the same tax-free growth while you save, and the same tax-free withdrawal for your home. Then it's done. No repayment schedule hanging over you when you're already dealing with mortgage payments and property taxes.

Why people still consider the Home Buyers Plan

The numbers. You can borrow up to $35,000 from your RRSP through the Home Buyers Plan. The FHSA caps out at $40,000 total, but you can only contribute $8,000 per year. If you need $35,000 next year and you're starting from zero, the FHSA won't get you there.

That's the only reason to touch the Home Buyers Plan first. You need the money faster than the FHSA contribution room allows.

Here's what that looks like in practice: You want to buy in two years. You can contribute $16,000 to an FHSA over those two years, but you need $30,000 for your down payment. The extra $14,000 has to come from somewhere - either the Home Buyers Plan or a regular savings account where growth gets taxed.

In that case, put $8,000 per year into the FHSA and the rest into your RRSP, planning to borrow it later. You get the tax deduction on all of it, tax-free growth on all of it, and you only have to repay the RRSP portion.

The math at $80,000 income in Ontario

FHSA contribution: $8,000 × 31.5% marginal rate = $2,520 tax refund RRSP contribution: $8,000 × 31.5% marginal rate = $2,520 tax refund

Both accounts give you the same upfront tax break. Both grow tax-free while you save. The difference is what happens after you buy.

FHSA: You withdraw $8,000 tax-free. Done. RRSP: You borrow $8,000 tax-free. Then you repay $533 per year for 15 years - and that $533 doesn't give you another tax deduction.

TaxSplit.ca will show you the exact refund numbers for your province and income, but the FHSA advantage doesn't change. Free money vs borrowed money that needs paying back.

When you have contribution room in both

Max out the FHSA first. If you're starting from zero and buying in five years, you can contribute $8,000 per year and hit the $40,000 lifetime limit. If you need more than $40,000 for your down payment, then start putting money into your RRSP with the plan to use the Home Buyers Plan for the difference.

The 2025 RRSP limit is $32,490 - or 18% of last year's earned income, whichever is lower. Most people have enough room to do both if they're planning ahead.

The one exception

You're buying this year and starting from zero contribution room. The FHSA won't help you - $8,000 isn't enough, and you can't make up for lost years. The Home Buyers Plan becomes your only tax-advantaged option for first-time buyer savings.

Otherwise, FHSA first. It's the Home Buyers Plan without the strings attached.