Last updated: October 16, 2026. Rules and limits checked against Canada Revenue Agency (CRA) pages on that date.
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Key takeaways
– FHSA first, for most first-time buyers. You get a tax deduction going in and pay no tax coming out on a qualifying withdrawal. Each year gives you $8,000 of room, up to $40,000 over your lifetime.
– The RRSP Home Buyers’ Plan (HBP) lets you withdraw up to $60,000 from your RRSPs tax-free. You have to pay it back over 15 years. If your first withdrawal is between 2026 and 2028, repayments don’t start until the fifth year after the withdrawal.
– The TFSA is the flexible backup. In 2026 you get $7,000 of new room. Money comes out tax-free for any purpose, with no repayment.
– You can use all three for the same home. CRA confirms that you can make an HBP withdrawal and a qualifying FHSA withdrawal for the same qualifying home.
Why this decision matters
Saving a down payment in Canada takes years, and the account you save in can change your result by thousands of dollars. Canada has three registered accounts that can help first-time buyers:
- First Home Savings Account (FHSA): built for exactly this purpose.
- RRSP Home Buyers’ Plan (HBP): a way to borrow from your own retirement savings.
- Tax-Free Savings Account (TFSA): a general-purpose account that also works for home savings.
Here is how each one works in 2026, how they compare, and a simple order of priority.
The FHSA in plain language
The FHSA combines the best part of an RRSP with the best part of a TFSA.
- Contributions are generally tax-deductible. This works like an RRSP contribution and reduces your taxable income (CRA: FHSA).
- Qualifying withdrawals are tax-free and never need to be repaid. This works like a TFSA withdrawal (CRA: Withdrawals).
FHSA limits
| Rule | Amount |
|---|---|
| Participation room in the year you open your first FHSA | $8,000 |
| Maximum unused room you can carry forward | $8,000 (so your room in a year can reach $16,000) |
| Lifetime limit | $40,000 |
Sources: CRA: Participating in your FHSAs, CRA: FHSA definitions
Room only starts once you open an account. You don’t build up any FHSA room until you open your first FHSA. Even if you can’t contribute yet, opening one early starts the clock on your room.
Who can open an FHSA
According to the CRA’s eligibility page, you must meet all of these conditions when you open the account:
- You are a resident of Canada.
- You are at least 18. In provinces where the age of majority is 19, you must be 19.
- You are no older than 71 as of December 31 of the year you open it.
- You are a first-time home buyer. This means that in the current year or the previous four calendar years, you did not live as your principal residence in a home that you owned or jointly owned. The same applies to a home owned by your current spouse or common-law partner.
How long an FHSA can stay open
Your FHSA has to close by December 31 of the year in which the earliest of these happens (CRA: Closing your FHSA):
- the 15th anniversary of opening your first FHSA
- you turn 71
- the year after your first qualifying withdrawal
If you never buy a home
You can transfer the money directly to your RRSP or RRIF with no immediate tax. CRA says a direct transfer generally doesn’t affect your unused RRSP deduction room (CRA: Withdrawals and transfers). In other words, the FHSA has very little downside.
The RRSP Home Buyers’ Plan (HBP) in plain language
The HBP lets you withdraw money from your RRSPs to buy or build a qualifying home without paying tax on the withdrawal. You then repay the money to your RRSP on a set schedule.
- Withdrawal limit: $60,000 per person (CRA: The Home Buyers’ Plan).
- Repayment: up to 15 years (CRA: Repaying the HBP).
- Repayment relief for 2026–2028: If your first HBP withdrawal is between January 1, 2026 and December 31, 2028, your 15-year repayment period starts in the fifth year after the withdrawal instead of the second. CRA’s example: if your first withdrawal is in 2026, your first repayment year is 2031 (CRA).
- Missed repayments are added to your income. Any required repayment you don’t make in a year is reported as RRSP income (line 12900) for that year and taxed (CRA). Plan for repayments the same way you plan for a car payment.
Who can use the HBP
According to CRA’s HBP participation page:
- You must be a first-time home buyer. For the HBP, this means you haven’t lived in a home that you or your current spouse or partner owned at any time in the previous four calendar years, or earlier in the current year. The 30 days right before the withdrawal don’t count. (This condition doesn’t apply if you are buying for a specified disabled person.)
- You must have a written agreement to buy or build a qualifying home in Canada.
A common trap: CRA uses different “first-time home buyer” tests for opening an FHSA, for making a qualifying FHSA withdrawal, and for the HBP. Check each test separately for your situation.
The TFSA in plain language
- 2026 dollar limit: $7,000, added to your contribution room on January 1, 2026 (CRA: TFSA room).
- No deduction when you contribute.
- Tax-free growth and tax-free withdrawals for any purpose. The amount you withdraw is added back to your contribution room on January 1 of the following year (CRA example).
- No first-time buyer rules, no deadlines, and no repayment.
Side-by-side comparison (2026)
| FHSA | RRSP Home Buyers’ Plan | TFSA | |
|---|---|---|---|
| Tax deduction on contributions | Yes (generally) | Yes (when you contribute to the RRSP) | No |
| Tax on a home withdrawal | None (qualifying withdrawal) | None (if HBP rules are met) | None |
| Must repay? | No | Yes, over 15 years | No |
| How much | $8,000/yr; $40,000 lifetime | Up to $60,000 withdrawal | $7,000 new room in 2026, plus unused room |
| First-time buyer test | Yes | Yes (with exceptions) | No |
| If you don’t buy | Transfer to RRSP/RRIF tax-free, or taxable withdrawal | Money stays in RRSP for retirement | Use it for anything |
| Main risk | Over-contributing (1% per month tax) | Missed repayments added to income | Over-contributing (penalty tax) |
Which should you use first? A practical order
There’s no single right answer, but this order works for many first-time buyers.
- Open an FHSA now, even with $0. Your room only starts building once the account exists.
- Fill your FHSA room each year if you can. You get a deduction, tax-free growth and a tax-free withdrawal for your home, and nothing to repay. The deduction is usually worth more in a higher-income year. You also don’t have to claim the deduction in the year you contribute; CRA lets you claim it in a later year (CRA: Tax deductions for FHSA contributions).
- Use your TFSA for extra savings and your emergency fund. You can get the money out quickly, with no conditions.
- Consider the HBP as a top-up, especially if you already have RRSP savings (for example, from a workplace group RRSP). The 2026–2028 repayment relief makes it easier to manage. But the money you withdraw stops growing for retirement until you repay it.
When the HBP may come first
- You already have a large RRSP balance and your closing date is soon. An FHSA can’t hold more than $16,000 of new room in any one year.
- You’re buying with a partner. Each person can use their own FHSA and their own HBP for the same qualifying home. CRA’s FHSA examples show partners each making qualifying withdrawals from their own accounts (CRA).
A worked example (illustrative, not a forecast)
Priya opens an FHSA in January 2026 and contributes $8,000 a year for five years. She reaches the $40,000 lifetime limit in 2030. Any investment growth inside the FHSA can also be withdrawn tax-free as part of a qualifying withdrawal. She also has $25,000 in a group RRSP from work, which she can withdraw under the HBP. Her TFSA holds her emergency fund.
When she buys in 2031, she could withdraw her full FHSA balance plus $25,000 under the HBP. Under current rules, her HBP repayments would begin in the fifth year after her first withdrawal year.
This example doesn’t predict any rate of return. Investment returns aren’t guaranteed.
Mistakes to avoid
- Over-contributing to your FHSA. CRA charges 1% per month on your highest excess amount (CRA: Contributing too much). Remember that RRSP-to-FHSA transfers also use up FHSA room.
- Withdrawing from the FHSA and then depositing into an RRSP yourself. That counts as a taxable withdrawal. Use a direct transfer with Form RC721 instead.
- Forgetting Schedule 15. You must file it for the year you open your first FHSA, even if you didn’t contribute (CRA).
- Missing the deadline for a qualifying withdrawal. You need a written agreement to buy or build, with a completion date before October 1 of the year after the withdrawal. You also use Form RC725 to request the withdrawal.
FAQ
Can I have an FHSA, an RRSP and a TFSA at the same time?
Yes. They are separate accounts with separate limits. You can also use the FHSA and the HBP for the same home (CRA).
What is the FHSA limit for 2026?
If you open your first FHSA in 2026, your room is $8,000. If you opened one in an earlier year, you also carry forward up to $8,000 of unused room. The lifetime cap is $40,000. Check your CRA My Account for your exact figure.
Is the HBP limit still $60,000 in 2026?
Yes. As of October 2026, CRA lists the HBP withdrawal limit as $60,000.
Do I have to repay my FHSA?
No. A qualifying withdrawal doesn’t need to be repaid. A qualifying withdrawal also can’t be undone, and putting the money back in counts as a new, non-deductible contribution.
I’m a newcomer to Canada. Can I open an FHSA?
If you’re a Canadian resident who is at least 18 (19 in some provinces) and you meet the first-time buyer test, generally yes. The test looks at homes you owned and lived in anywhere, not just in Canada (“or what would be a qualifying home if located in Canada”).
What if I move in with a partner who owns a home?
You may no longer qualify to open an FHSA. CRA’s example “Carlos” explains this (CRA). If you already have an FHSA, the test for making a qualifying withdrawal looks only at homes you owned.
Disclaimer
This article is general information, not financial, tax or legal advice. Rules change, and your situation is unique. Check your own limits in CRA My Account, and consider speaking with a qualified tax professional or fee-only financial planner before you decide.
Sources
- CRA, First Home Savings Account (FHSA): https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/first-home-savings-account.html
- CRA, Opening your FHSAs: https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/first-home-savings-account/opening-your-fhsas.html
- CRA, Participating in your FHSAs: https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/first-home-savings-account/contributing-your-fhsa.html
- CRA, Definitions for FHSAs: https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/first-home-savings-account/definitions.html
- CRA, Withdrawals and transfers out of your FHSAs: https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/first-home-savings-account/withdrawals-transfers-out-your-fhsas.html
- CRA, Closing your FHSA: https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/first-home-savings-account/closing-your-fhsa.html
- CRA, What happens if you contribute or transfer too much to your FHSAs: https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/first-home-savings-account/what-happens-contribute-transfer-too-much.html
- CRA, The Home Buyers’ Plan: https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/rrsps-related-plans/what-home-buyers-plan.html
- CRA, How to participate in the HBP: https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/rrsps-related-plans/what-home-buyers-plan/participate-home-buyers-plan.html
- CRA, Repaying the HBP: https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/rrsps-related-plans/what-home-buyers-plan/repay-funds-withdrawn-rrsp-s-under-home-buyers-plan.html
- CRA, Calculate your TFSA contribution room: https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/tax-free-savings-account/contributing/calculate-room.html
- CRA, Tax deductions for FHSA contributions: https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/first-home-savings-account/tax-deductions-fhsa-contributions.html