Using the FHSA with the Home Buyers' Plan
Before the FHSA, the main federal tool for first-time buyers was the RRSP Home Buyers' Plan, usually shortened to HBP. The CRA is explicit that you can use both for the same qualifying home, as long as you meet all the conditions at the time of each withdrawal. Used together, they are the largest tax-assisted down payment most first-time buyers can assemble without a gift or a loan.
The two tools side by side
| Feature | FHSA qualifying withdrawal | HBP withdrawal from an RRSP |
|---|---|---|
| Maximum per person | Your full balance: lifetime contributions up to $40,000 plus growth | $60,000 for withdrawals after 16 April 2024 (previously $35,000) |
| Tax on withdrawal | Tax-free | Tax-free if conditions are met |
| Repayment | Never repaid | Repaid to your RRSP over 15 years |
| When repayment starts | Not applicable | Normally the second year after the year of withdrawal; a temporary measure gives a 5-year grace period for a first withdrawal made between 1 January 2022 and 31 December 2025 |
| If you miss a repayment | Not applicable | The shortfall is added to your taxable income for that year |
| Combined for one buyer | Up to $100,000 of tax-assisted money ($40,000 FHSA contributions plus $60,000 HBP), plus FHSA growth; a qualifying couple can double both figures | |
Why the order matters
Use the FHSA first in your planning, because its money never comes back to haunt you: no repayment schedule, no annual minimum, no income inclusion if you miss a year. Use the HBP for the remainder, because it is a loan from your own retirement savings: while the money is out of the RRSP it is not growing for retirement, and the 15-year repayment schedule is a real commitment. If you repay less than the required amount in a year, the shortfall is taxed as income for that year, and the repayment itself is not tax-deductible, because you already deducted the original RRSP contribution.
The HBP 90-day rule
RRSP contributions must generally stay in the RRSP for at least 90 days before you withdraw them under the HBP, or the withdrawn amount may not be deductible. Do not contribute a lump sum to your RRSP and pull it straight back out as a down payment inside 90 days: the deduction on that amount can be lost. If you are funding the HBP deliberately, make the RRSP contribution at least 90 days before you need the funds. The FHSA has no equivalent 90-day rule, but its own timing rules, the written agreement and the 1 October deadline, still apply.
Do not double-count the same dollars
Money moved from your RRSP into your FHSA counts against your FHSA room and is not deductible a second time, but it is still RRSP money that left the RRSP. If you then also withdraw under the HBP, the two amounts must come from different dollars. Track every transfer on Schedule 15 and on your HBP records, and confirm your remaining room on your notice of assessment before you move money.
Sources: Canada Revenue Agency, Withdrawals and transfers out of your FHSAs (FHSA and HBP for the same home); Canada Revenue Agency, Home Buyers' Plan guidance (limit, repayment, 90-day rule), as in force for withdrawals after 16 April 2024.