FHSA vs. RRSP: Which should you use for your first home?

When saving for a down payment in Canada, the question is no longer just "how much can I save," but "where should I put it." With the introduction of the FHSA, the rules of the game have changed.

For years, the RRSP Home Buyers’ Plan (HBP) was the goto strategy. Now, the FHSA offers a "tax-free in, tax-free out" model that is hard to beat. But many first-time buyers are actually best served by using both. Let's compare the two and see which fits your specific income level and timeline.

The Direct Comparison

Feature	FHSA	RRSP (Home Buyers' Plan)
Annual Limit	$8,000	Subject to RRSP room
Max Withdrawal	Unlimited (Full Balance)	$60,000
Repayment?	No repayment needed	Must repay over 15 years
Tax Effect	Deductible (Same as RRSP)	Deductible

Why the FHSA is usually "Step 1"

Because the FHSA is completely tax-free and requires no repayment, most advisors agree that you should prioritize the $8,000 annual FHSA contribution before putting additional down payment savings into an RRSP. Every dollar you put in an RRSP for a home is essentially a loan from your future self that you have to pay back after you buy the home.

When the RRSP "Step 2" Makes Sense

If you have already maxed out your $8,000 FHSA limit for the year and still have extra cash to save, the RRSP becomes your second-best tool. By contributing to your RRSP, you trigger a tax refund which you can then reinvest into your down payment fund, accelerating your growth.