Updated March 2025 · 8 min read

FHSA vs RRSP Home Buyers Plan 2025: Which Is Better?

Quick Answer: The FHSA is better than the RRSP Home Buyers Plan for most first-time buyers. FHSA withdrawals are tax-free with no repayment required. The HBP is a loan from your RRSP — you must repay it over 15 years or face income tax. Use both if you can.

Canadian first-time home buyers have two powerful registered account tools to help save for a down payment: the new First Home Savings Account (FHSA) and the RRSP Home Buyers Plan (HBP). Both offer significant tax advantages, but they work very differently. Here's a side-by-side breakdown.

FHSA vs RRSP HBP: Full Comparison

Feature	FHSA	RRSP Home Buyers Plan
Annual contribution limit	$8,000	No dedicated limit (uses RRSP room)
Lifetime limit	$40,000	$60,000 (increased 2024)
Tax deduction on contribution	Yes	Yes (when contributing to RRSP)
Tax on growth	Tax-free	Tax-deferred
Tax on withdrawal for home	Tax-free	Tax-free (but repayment required)
Repayment required?	No	Yes — over 15 years
Penalty for non-repayment	N/A	1/15th added to income each year
RRSP room impact	None	Temporarily reduces RRSP room
Must be in account how long?	No minimum	90 days before withdrawal
Available since	April 2023	1992
If home not purchased	Transfer to RRSP tax-free	Stays in RRSP

Why the FHSA Wins for Most Buyers

1. No Repayment Required

The FHSA is not a loan. When you withdraw to buy your first home, the money is yours — no repayment schedule, no penalty for not repaying, no impact on future RRSP contributions. The HBP requires you to repay the withdrawn amount over 15 years or face annual income inclusion.

2. Does Not Deplete RRSP Room

FHSA withdrawals have zero impact on your RRSP contribution room. The HBP temporarily occupies RRSP room and requires repayment to restore it. For high earners building retirement savings, preserving RRSP room is valuable.

3. Tax-Free Growth, Not Just Tax-Deferred

FHSA growth is completely tax-free — just like a TFSA. RRSP growth is tax-deferred, meaning when you eventually make non-HBP withdrawals, you pay income tax. The FHSA's growth never gets taxed if used for a qualifying home purchase.

Why the RRSP HBP Still Has Value

Higher Lifetime Limit

The HBP was increased to $60,000 (per person, $120,000 per couple) in 2024. With the FHSA capped at $40,000, using both gives a couple access to up to $200,000 in registered savings for a down payment: $40,000 FHSA + $60,000 HBP each.

Existing RRSP Savings

If you already have significant RRSP savings built up, the HBP lets you tap those funds for a home purchase without immediate tax consequences. The FHSA requires building up new contributions specifically for this purpose.

The Best Strategy: Use Both

For most first-time buyers with a 2–10 year horizon:

Open an FHSA immediately and contribute $8,000/year (or catch up with carry-forward room)
Invest FHSA in a growth ETF (XGRO or VGRO) for medium-term, or GICs if buying within 2 years
Continue contributing to RRSP as usual for retirement
At purchase time, withdraw full FHSA balance (tax-free, no repayment)
If more down payment is needed, use RRSP HBP on top of FHSA withdrawal

Couple Advantage: Two first-time buyers purchasing together can each have an FHSA ($40,000 each) and use the HBP ($60,000 each) — total registered savings available: up to $200,000 toward a down payment, with significant tax advantages on all contributions.

FHSA Withdrawal Rules

To make a qualifying FHSA withdrawal:

Must be a first-time home buyer (no home owned in current or prior 4 years)
Must have a written agreement to buy or build before Oct 1 of the following year
Must intend to occupy as principal residence within 1 year
Must be a Canadian resident

RRSP HBP Repayment Rules

HBP withdrawals must be repaid over 15 years starting the second year after withdrawal. Annual repayment = total withdrawal / 15. If you fail to make the minimum annual repayment, that year's missed amount is added to your taxable income.

For the full HBP guide, see our RRSP Home Buyers Plan 2025 article.

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