First‑Time Home Buyer Savings Options in Canada

Saving for your first home can feel overwhelming — especially with rising prices and so many programs to understand. The good news? The Government of Canada offers powerful savings tools specifically designed to help first‑time home buyers get into the market sooner.

Two of the most important programs are the First Home Savings Account (FHSA) and the Home Buyers’ Plan (HBP). When used correctly — and sometimes together — they can significantly improve your buying power.

Here’s how they work, in plain language.

The First Home Savings Account (FHSA): Built for First‑Time Buyers

The First Home Savings Account (FHSA) is one of the most generous home‑buyer programs Canada has ever introduced. It combines some of the best features of both an RRSP and a TFSA — but it’s designed only for buying your first home.

How the First Home Savings Account Works

You can contribute up to $8,000 per year, to a lifetime maximum of $40,000
Contributions are tax‑deductible (like an RRSP)
Withdrawals used to buy your first home are completely tax‑free (like a TFSA)
Investment growth inside the account is also tax‑free when used for a qualifying home purchase

This means you get a tax refund when you contribute, and you don’t pay tax when you use the money to buy your home.

Who Can Open an FHSA?

You may be eligible if:

You’re 18 or older
You’re a Canadian resident
You’re a first‑time home buyer (generally, you didn’t own and live in a home in the current year or the previous four years)

Once opened, you can keep an FHSA for up to 15 years, or until the end of the year you turn 71 — whichever comes first. For more information consult with your Accountant or check out Canada.ca

The Home Buyers’ Plan (HBP): Using Your RRSP to Buy a Home

The Home Buyers’ Plan (HBP) allows first‑time buyers to borrow from their RRSP to buy a home, without paying tax at the time of withdrawal.

How the HBP Works

You can withdraw up to $35,000 from your RRSP
Couples can withdraw up to $70,000 combined
The money must be used to buy or build a qualifying home
You must repay the amount to your RRSP over time (generally over up to 15 years)

If you don’t repay the required amount in a given year, that portion is added to your taxable income for that year.

Important Things to Know About the HBP

The funds must have been in your RRSP for at least 90 days before withdrawal
This is not “free money” — it’s more like a loan to yourself
It can still be very helpful for buyers who already have RRSP savings

For more information consult your Accountant or check out Canada.ca

FHSA vs. HBP: What’s the Difference?

Feature	FHSA	Home Buyers’ Plan (HBP)
Tax deduction when contributing	✅ Yes	✅ Yes
Tax‑free withdrawal for home purchase	✅ Yes	Used to reduce tax
Annual contribution limit	$8,000	RRSP rules apply
Lifetime maximum	$40,000	$35,000 per person
Repayment required	❌ No	✅ Yes

Key takeaway:
The FHSA is generally more flexible and powerful for new savers, while the HBP works best for buyers who already have RRSP funds.

Can You Use the FHSA and HBP Together?

Yes — and many first‑time buyers do.

For example, a buyer could:

Save $40,000 in an FHSA
Withdraw up to $35,000 from an RRSP using the HBP
Combine those funds for a larger down payment

When coordinated properly, these programs can dramatically reduce the time it takes to save and increase your purchasing options.

Why These Programs Matter for First‑Time Buyers

Saving for a down payment is one of the biggest barriers to homeownership. These programs exist to:

Reward disciplined saving
Reduce tax burden
Help first‑time buyers enter the market sooner

When paired with other incentives (like GST rebates on new homes), they can make buying your first home far more achievable than many people expect.

Final Thoughts

The FHSA and Home Buyers’ Plan are powerful tools — but only if you understand how and when to use them. Every buyer’s situation is different, and timing matters.

If you’re thinking about buying your first home, learning how these savings options work before you start shopping can help you make smarter, more confident decisions.

Want help connecting these savings options to real homes you can afford?

Understanding the programs is step one. Applying them to real‑world buying decisions is where clarity really matters.