You've been saving for a few years toward a first home. Someone mentioned the HBP, someone else the FHSA, and you're not sure whether to pick one, the other, or both. Short answer: in most cases, both. Here's the long version with 2026 figures and the traps to avoid.
The two tools, in one sentence each
- HBP (Home Buyers' Plan): you withdraw up to $60,000 from your RRSP (limit raised in 2024) tax-free, on the condition that you repay the amount over 15 years back into your RRSP.
- FHSA (First Home Savings Account): you contribute up to $8,000/year (cumulative cap $40,000), get a tax deduction like an RRSP, and withdraw without ever repaying and without tax on the gains to buy a first home.
If you're a couple and both partners are eligible, the theoretical potential is 2 × ($60,000 + $40,000) = $200,000 available as a down payment — not counting the returns built up inside the accounts while you save.
What changed in 2024-2026
Three key changes before planning:
- HBP cap raised to $60,000 (previously $35,000) since April 2024. Withdrawals made between 2022 and 2025 also benefit from a 5-year grace period before repayment kicks in (instead of 2 years).
- The FHSA has existed since 2023. You may already have accumulated room for 2023, 2024, 2025 — up to $24,000 already if you opened the account early. Unused room carries forward up to $8,000/year (yearly cumulative maximum of $16,000 carried).
- The FHSA and HBP are stackable on the same purchase since 2023. Before, you had to choose one or the other. No longer.
When to prioritize the FHSA over the HBP
The FHSA wins on three fronts:
- No repayment. The HBP forces 15 years of mandatory RRSP repayments. Miss a payment and the unpaid amount is added to your taxable income. The FHSA is a definitive, tax-free withdrawal — no strings attached.
- Immediate tax deduction. Like an RRSP, your FHSA contribution reduces your taxable income the year you make it. At $80,000 income and an $8,000 contribution, your tax bill drops by about $2,800 (Quebec marginal rate ~37%).
- Savings locked for the home purchase. The money is mentally and fiscally earmarked — you can't easily dip in for something else.
If you don't have much RRSP yet, start by maxing the FHSA. If you already have a substantial RRSP and want to preserve it for retirement, the FHSA is also the right first move.
When the HBP becomes the right tool
The HBP regains its edge in two typical situations:
- You're buying soon (12-18 months) and already have $30-60k in your RRSP. Opening an FHSA today won't give you time to accumulate $40,000 — use the existing RRSP via the HBP.
- You want to maximize beyond $40,000 (the FHSA cumulative cap). The HBP supplements above the FHSA ceiling.
In most 2026 scenarios, both are combined: drain the FHSA first (clean tax-free withdrawal, never to repay), then top up with an HBP withdrawal.
Three concrete scenarios
| Scenario | FHSA used | HBP used | Total down payment |
|---|---|---|---|
| Solo, 32, $75k income, opened FHSA in 2024 | $24,000 (3 × $8,000) | $30,000 from existing RRSP | $54,000 |
| Couple, 30 + 32, 2 × $70k, opened in 2023 | 2 × $32,000 = $64,000 | 0 (no significant RRSP) | $64,000 |
| Couple, 38 + 36, 2 × $95k, well-funded RRSPs | 2 × $40,000 = $80,000 | 2 × $60,000 = $120,000 | $200,000 |
Your real situation depends on past contributions, accumulated FHSA/RRSP room, and your tax strategy.
The HBP repayment trap nobody reads
The HBP fine print says: each year, you must put 1/15 of the withdrawn amount back into your RRSP, otherwise that portion is added to your taxable income. On a $60,000 withdrawal, that's $4,000/year for 15 years. If you stop contributing to your RRSP (or forget), the CRA adds $4,000 to your income — roughly $1,500 of extra tax each year.
This is precisely why the FHSA is generally preferred when you can open early and contribute gradually.
What this changes on your mortgage file
A larger down payment has three compounding effects:
- Down payment ≥ 20% = no CMHC/Sagen/Canada Guaranty mortgage insurance. The premium runs 2.8-4% of the insured amount — on a $450,000 loan, that's $12,600-18,000 in premium avoided.
- Lower loan-to-value ratio = access to better lender programs, often with more favorable rates and no insurance constraint.
- Better stress test position: the federal stress test limits how much you can borrow; a larger down payment reduces the financed amount and takes pressure off the ratio calculation.
Concrete example: $80,000 down payment on a $500,000 property (16%) → CMHC insurance required (premium ~$13,000 added to the loan). $100,000 down payment on the same property (20%) → no CMHC insurance. The difference: $13,000 in premium avoided, plus access to non-insured programs that are often more flexible.
What Courteo does
Courteo is not a broker. We connect you with a mortgage broker holding an AMF license who will look concretely at your situation: your existing HBP and FHSA accounts, your purchase timeline, and the lenders that fit your profile. Fine HBP/FHSA tax planning also deserves a financial planner or accountant in parallel.
Frequently asked questions: HBP and FHSA
Can we both use our FHSAs if my partner already owns a property?
The FHSA is individual. If your partner has owned a home in the past 5 years, they don't qualify as a first-time buyer and can't use their FHSA on this transaction. But you — if it's your first purchase — can use your own FHSA normally. The HBP works the same way: it's your personal RRSP, not a joint account.
I opened my FHSA 3 months ago with $0. Can I contribute $16,000 now to catch up?
Yes — unused FHSA room carries forward, up to a cumulative maximum of $16,000 per year (the equivalent of two years of room). If you opened in 2025 and made no contributions, you can contribute $16,000 in 2026. Note that FHSA contributions share the overall contribution room framework — verify your available room before contributing.
Are the investment returns inside the FHSA also tax-free?
Yes — unlike the RRSP, gains (interest, dividends, capital gains) inside an FHSA are withdrawn tax-free when used for a first home purchase. This is one of the most advantageous tax features of the program.
If I end up not buying, what happens to my FHSA?
You can transfer the balance into your RRSP without any tax impact and without losing RRSP contribution room. That's the clean exit if you change plans. You don't get back the tax deduction you already received on contributions — but you keep the money in your retirement savings.