Money & tax

FHSA + Home Buyers’ Plan: How to Stack Both for a Toronto Down Payment

Canada gives first-time buyers two tax-sheltered ways to build a down payment, and since 2023 you can use both on the same home. Together they let one person put $100,000 of tax-advantaged money toward a purchase — $200,000 for a couple — which in Toronto is the difference between an insured mortgage on a condo and 20% down. Here is how each works, how they combine, and the mistakes that cost people the benefit.

Updated October 22, 2026 · TORE.ca editorial

1. 1.The First Home Savings Account (FHSA)

   Launched April 1, 2023, the FHSA combines the best feature of an RRSP (contributions are tax-deductible) with the best feature of a TFSA (withdrawals for a qualifying home are tax-free). You can contribute $8,000 a year to a lifetime maximum of $40,000, and investment growth inside the account is never taxed if it is used for a first home.

   • Eligibility: Canadian resident, 18 to 71, and a first-time buyer — meaning you did not live in a home you or your spouse owned in the current year or the previous four calendar years.
   • Contribution room starts only when you open the account — it does not accrue from age 18 like a TFSA. Open it as early as possible, even with $1, to start the clock.
   • Unused room carries forward, but only up to $8,000 — so the most you can contribute in one year is $16,000.
   • Deductions can be carried forward to a higher-income year, like an RRSP.
   • The account can stay open 15 years or until the end of the year you turn 71, whichever is first. If you never buy, you can transfer the balance to an RRSP or RRIF tax-free without using RRSP room.
   • Withdrawals for a qualifying home are tax-free and do not have to be repaid. You must have a written agreement to buy or build before October 1 of the year after the withdrawal and intend to occupy the home within a year.

   A couple who each open an FHSA and contribute the maximum for five years puts $80,000 into down-payment savings and gets about $25,000–$35,000 back in tax refunds at Toronto incomes — money that can itself go into the down payment.

2. 2.The Home Buyers’ Plan (HBP)

   The HBP lets you withdraw from your RRSP to buy or build a first home without paying tax on the withdrawal, provided you repay it to your RRSP over 15 years. The limit was raised from $35,000 to $60,000 per person for withdrawals made after April 16, 2024, so a couple can withdraw $120,000.

   • Eligibility: first-time buyer under the same four-year test as the FHSA, Canadian resident, with a written agreement to buy or build, and you must intend to live in the home within a year.
   • The 90-day rule: contributions made within 90 days of the withdrawal cannot be withdrawn under the HBP (you lose the deduction). Plan RRSP top-ups at least three months before you expect to withdraw.
   • Repayment: normally starts the second year after withdrawal, 1/15 per year. For first withdrawals made between January 1, 2022 and December 31, 2028, the start is deferred to the fifth year — a temporary relief measure the CRA extended in 2025.
   • A missed repayment is added to your income for that year and taxed. Repayments are not deductible (you already deducted the original contribution).
   • Previous owners can re-qualify after four full calendar years out of home ownership, and the HBP has a separate door for buyers who are, or are buying for, a person eligible for the disability tax credit.

3. 3.Using both on the same purchase

   Since the FHSA launched, the rules explicitly allow an FHSA withdrawal and an HBP withdrawal for the same qualifying home. The order and timing matter:

   • Per person: up to $40,000 FHSA (plus growth) + $60,000 HBP = $100,000 of sheltered money. Per couple: $200,000.
   • The FHSA money is yours — no repayment. The HBP money is a loan from your own retirement savings that you repay over 15 years.
   • If your RRSP is thin, you can transfer from an RRSP into an FHSA (using FHSA room, no tax, but no new deduction) to convert repayable money into non-repayable money. Not usually worth it unless you have RRSP room you would not otherwise use.
   • Both withdrawals must happen before closing, with the agreement of purchase and sale in hand. Your FHSA issuer needs form RC725; your RRSP issuer needs form T1036.

   A Toronto condo example

   A couple buying a $750,000 condo. Each has maxed an FHSA for four years ($32,000 each, grown to about $36,000) and has $50,000 in an RRSP. They withdraw $36,000 + $50,000 each — $172,000 in total — and add $20,000 of savings. That is $192,000, or 25.6% down: no mortgage default insurance, a 30-year amortization available at any lender, and a mortgage of $558,000 instead of $712,500-plus-premium with 5% down. Their monthly payment at 4.5% over 30 years is about $2,830 instead of $3,755, and they avoid roughly $28,500 of insurance premium. They each repay $3,333 a year to their RRSPs starting in year five.

4. 4.The other first-time buyer programs to stack on top

   • Land transfer tax rebates: up to $4,000 (Ontario) + $4,475 (Toronto) = $8,475 off closing costs. See the land transfer tax guide.
   • Home Buyers’ Amount: a $10,000 non-refundable federal tax credit (worth $1,500 at the 15% rate) claimed on your tax return for the year of purchase. Either spouse can claim it or you can split it.
   • First-Time Home Buyers’ GST Rebate: for a newly built home with an agreement signed on or after May 27, 2025, 100% of the federal GST portion is rebated up to $1 million and phases out to $1.5 million.
   • 30-year insured amortization: first-time buyers with under 20% down can amortize over 30 years since December 15, 2024, lowering the payment about 8–9% versus 25 years.

   None of these are mutually exclusive. A first-time couple buying a new Toronto condo in 2026 can use the FHSA, the HBP, both land transfer rebates, the Home Buyers’ Amount, the GST rebate and a 30-year insured amortization on one transaction.

5. 5.Mistakes that cost the benefit

   • Opening the FHSA too late. Room starts at opening, not at 18. Someone who opens at 30 and buys at 32 has $16,000 of room, not $40,000.
   • Contributing more than $8,000 (plus one year’s carry-forward) — the overcontribution tax is 1% per month.
   • Making an RRSP contribution and withdrawing it under the HBP within 90 days — the deduction is denied.
   • Owning a rental. If you or your spouse owned a home you lived in during the last four calendar years, you are not a first-time buyer for either program — but a property you owned and never occupied (a pure rental) does not disqualify you.
   • Missing the FHSA deadline: once you make a qualifying withdrawal, the account must be closed by the end of the following year, and you cannot open another.
   • Forgetting that a spouse who owned a home before the relationship can still disqualify you if you lived in that home with them in the last four years.

6. 6.Which account to fund first

   For almost every first-time buyer in Ontario: FHSA first, every year, to the $8,000 maximum. It is deductible going in, tax-free coming out, and never has to be repaid — strictly better than both the RRSP and the TFSA for this purpose. Fund the RRSP second if you expect to buy in more than two years and have income above roughly $55,000 (where the deduction is worth more), and keep the 90-day rule in mind. Use the TFSA for the portion of the down payment you might need on short notice — deposit timing and closing-cost cash — because it has no withdrawal rules at all.

Rules cited: Income Tax Act s.146.6 (FHSA) and CRA FHSA guidance — $8,000 annual / $40,000 lifetime, $8,000 carry-forward cap, 15-year/age-71 limit, RC725; Income Tax Act s.146.01 (HBP) and CRA HBP guidance — $60,000 limit for withdrawals after April 16, 2024, 90-day rule, 15-year repayment, temporary 5-year repayment deferral for first withdrawals January 1, 2022 – December 31, 2028, T1036; Home Buyers’ Amount (line 31270); CRA First-Time Home Buyers’ GST Rebate (agreements on/after May 27, 2025); Department of Finance insured-mortgage rules (30-year amortization for first-time buyers, effective December 15, 2024); Ontario and Toronto land transfer tax refund rules. Example payments computed at 4.5% with Canadian semi-annual compounding approximated monthly.