Two different government programs help first-time buyers save — and most buyers don't realize they can use both.
Two federal programs exist specifically to help first-time buyers save toward a purchase, and the two get confused constantly because they solve a similar problem in different ways. Neither replaces good financial advice for your specific situation, but understanding the shape of each makes that conversation with an accountant or financial advisor much more productive.
The FHSA is a registered account designed specifically for first-time home purchases. Contributions are tax-deductible the way RRSP contributions are, and — unlike an RRSP — qualifying withdrawals for a first home come out completely tax-free, closer to how a TFSA works. It effectively combines the deduction benefit of one account type with the tax-free withdrawal benefit of the other, but only for this one purpose.
There's an annual contribution limit and a separate lifetime contribution limit, with unused annual room carrying forward to future years (up to a cap). The exact dollar limits are set federally and are worth confirming directly with the CRA or a financial advisor, since program details can be adjusted.
The Home Buyers' Plan is a different mechanism entirely: it lets a first-time buyer withdraw funds already sitting in an RRSP, tax-free at the time of withdrawal, to put toward a home purchase — with the requirement that the withdrawn amount gets repaid back into the RRSP over a set number of years. Skip a required repayment, and that year's portion gets added back to taxable income.
Because the FHSA and the HBP are separate programs with separate rules, many first-time buyers in the GTHA use both: FHSA contributions build tax-free, dedicated home-buying savings, while an existing RRSP balance can still be tapped through the HBP for additional funds at closing. The right mix depends on your income, your timeline to purchase, and your existing savings — which is a conversation for an accountant or financial planner, not a blanket recommendation.
Where this fits the buying process: figuring out how much of your down payment comes from an FHSA, an HBP withdrawal, or other savings should happen during mortgage pre-approval — before you're touring homes, not after you've found one.
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