First Home Savings Account (FHSA) and Home Buyers' Plan: Use Both Together
First-time home buyers in Canada can use both the First Home Savings Account (FHSA) and the Home Buyers' Plan (HBP) to withdraw funds for the same qualifying home purchase. You can combine your FHSA savings (up to $8,000 of contributions a year and $40,000 in total) with up to $60,000 from your RRSPs under the HBP, as long as you meet the conditions for each withdrawal.
What is the First Home Savings Account (FHSA)?
The FHSA is a registered savings account designed specifically for first-time home buyers. You can contribute up to $8,000 per year, with a lifetime limit of $40,000. Contributions are tax-deductible, and withdrawals to buy a qualifying home are tax-free.
Key features:
- Annual contribution limit: $8,000 in the year you open your account, then up to $8,000 each following year
- Lifetime contribution limit: $40,000 total across all years
- Tax deduction: You can deduct your FHSA contributions from your taxable income
- Tax-free growth: Investment income earned in your FHSA is not taxed
- Qualifying withdrawal: Withdraw funds tax-free to buy your first qualifying home
- Maximum participation period: 15 years from opening, or until you turn 71, or the year after your first qualifying withdrawal—whichever comes first
What is the Home Buyers' Plan (HBP)?
The Home Buyers' Plan allows you to withdraw funds from your RRSP to buy or build a qualifying home. The current withdrawal limit is $60,000.
Key features:
- Withdrawal limit: Up to $60,000 from your RRSP
- Repayment: You must repay the amount over 15 years (with temporary relief extending the repayment start to the fifth year following your withdrawal if you withdraw between January 1, 2026, and December 31, 2028)
- Eligibility: You must be a first-time home buyer and meet specific conditions
- No immediate tax: The withdrawal is not added to your income in the year you withdraw
FHSA vs. RRSP Home Buyers' Plan: Key Differences
| Feature | FHSA | Home Buyers' Plan (RRSP) |
|---|---|---|
| Annual limit | $8,000 | N/A (one-time withdrawal) |
| Limit | $40,000 of contributions (lifetime) | $60,000 per participation period |
| Tax deduction | Yes | Already deducted when contributed to RRSP |
| Repayment required | No | Yes, over 15 years |
| Tax-free growth | Yes | Yes (while in RRSP) |
| Qualifying withdrawal | Tax-free | Not taxed if repaid on schedule |
| Participation period | 15 years max | One-time withdrawal |
Can You Use the FHSA and Home Buyers' Plan Together?
Yes. You can withdraw from your RRSP under the Home Buyers' Plan and make a qualifying withdrawal from your FHSA for the same home purchase, as long as you meet all the conditions for each withdrawal.
Combined access: whatever is in your FHSA (contributions of up to $40,000 over the years, plus any investment growth) plus up to $60,000 from your RRSPs under the HBP. How much you can use depends on your FHSA balance, your RRSP savings and meeting each plan's conditions.
Conditions for using both:
- You must be a first-time home buyer for both the FHSA and HBP
- You must meet all eligibility requirements for each plan separately
- Both withdrawals must be for the same qualifying home
- You must have a written agreement to buy or build the home with a completion date before October 1 of the year following the withdrawal
- You must occupy the home as your principal place of residence within one year of purchase
How FHSA Contributions and Transfers Work
Your FHSA participation room is the maximum you can contribute or transfer into your account each year. In your first year, your participation room is $8,000. This limit applies to both contributions and transfers from your RRSP combined.
Example:
If you open an FHSA and want to contribute $5,000 and transfer $3,000 from your RRSP, your total is $8,000—exactly your participation room for that year. You cannot exceed $8,000 in combined contributions and transfers.
Important notes:
- Income earned in your FHSA does not count toward your participation room
- If you have multiple FHSAs, the $8,000 limit applies across all of them combined
- Unused participation room carries forward to future years (up to the $40,000 lifetime limit)
Making a Qualifying Withdrawal from Your FHSA
To withdraw funds tax-free from your FHSA to buy your first home, you must:
- Be a first-time home buyer: You did not own a qualifying home as your principal residence in the current calendar year (except the 30 days before withdrawal) or the previous 4 calendar years
- Have a written purchase agreement: The agreement must show a completion date before October 1 of the year following your withdrawal
- Not have acquired the home more than 30 days before withdrawal
- Be a Canadian resident: From the time of your first qualifying withdrawal until you acquire the home or pass away
- Intend to occupy the home: As your principal place of residence within one year of purchase
- Complete Form RC725: Request to Make a Qualifying Withdrawal from your FHSA and provide it to your FHSA issuer
If you meet all conditions, your withdrawal is tax-free and does not need to be reported as income.
Buying a Home with a Spouse or Partner
If you and your spouse or common-law partner are both first-time home buyers, you can each make a qualifying withdrawal from your own FHSAs for the same home. Each of you can withdraw some or all of your FHSA balance, and each withdrawal is tax-free if conditions are met.
You can also each use the Home Buyers' Plan from your own RRSPs for the same purchase.
When Your FHSA Participation Period Ends
Your maximum participation period ends on December 31 of the year in which the earliest of these events occurs:
- 15 years after you open your first FHSA
- You turn 71 years old
- The year following your first qualifying withdrawal
Before your participation period ends, you must either:
- Make a qualifying withdrawal to buy a home
- Transfer remaining funds to your RRSP or RRIF (tax-deferred)
- Withdraw remaining funds as a taxable withdrawal (added to your income)
If you do not close your FHSA or remove funds by the end of your participation period, the fair market value of your account is added to your income for that year.
Frequently asked questions
Can I use both the FHSA and Home Buyers' Plan for the same home?
Yes, as long as you meet all the eligibility conditions for each plan. You can withdraw up to $8,000 from your FHSA and up to $60,000 from your RRSP under the Home Buyers' Plan for the same qualifying home purchase.
Do I have to repay my FHSA withdrawal?
No. Qualifying withdrawals from your FHSA do not need to be repaid. However, withdrawals from your RRSP under the Home Buyers' Plan must be repaid over 15 years (with temporary relief extending repayment start to year five for withdrawals made between January 1, 2026, and December 31, 2028).
What counts as a qualifying home?
A qualifying home is a housing unit located in Canada, including single-family homes, semi-detached homes, townhouses, mobile homes, condominiums, apartments in multi-unit buildings, and shares in co-operative housing corporations. It does not include a share that only provides a right to tenancy.
Can my spouse use the Home Buyers' Plan if they are not a first-time home buyer?
Yes. One spouse can use the Home Buyers' Plan even if the other spouse has owned a home before, as long as the spouse using the HBP is a first-time home buyer. For the FHSA, both spouses must be first-time home buyers to each make a qualifying withdrawal.
What happens if I don't use my FHSA before my participation period ends?
You must close your FHSA by the end of your participation period. If you have funds remaining, you can transfer them to your RRSP or RRIF (tax-deferred) or withdraw them as taxable income. If you do not act, the fair market value of your account is added to your income for that year.
Can I contribute to my FHSA after I make a qualifying withdrawal?
No. Your participation period ends in the year following your first qualifying withdrawal. After that, contributions are no longer tax-deductible. You should close your FHSA and transfer or withdraw any remaining funds before the end of that year.
How Dinesh can help
Dinesh works with first-time home buyers to navigate pre-construction and resale purchases across the GTA. Understanding how to maximize tax-advantaged savings like the FHSA and Home Buyers' Plan is part of building a strong financial plan for your purchase. Dinesh can help you understand how these tools fit into your overall buying strategy and timeline. Book a call to discuss your first home purchase.
Sources
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What does this mean for you?
Book a free 15-minute call and Dinesh will walk you through how it affects your plans.
