While buying your first property may be exciting, arranging the down payment can be a challenge. Fortunately, in Québec, two tax tools are available to help you: an RRSP under the Home Buyers' Plan (HBP) and an FHSA.
So, should you go with an RRSP or FHSA? Find out more about these options and make a decision based on your reality and needs.
FHSA: What's it all about?
Launched in 2023, FHSA stands for "First Home Savings Account." It's a registered savings plan designed exclusively to help you buy your first home.
To assist you in making the right decision, we've answered the most frequently asked questions about this option.
Are FHSA contributions tax deductible?
Yes. As with an RRSP, every dollar you contribute to an FHSA reduces your taxable income. Contributions may then entitle you to a tax refund when filing your income tax return.
Are FHSA withdrawals taxable?
No. This is its best feature! As with the TFSA, you don't have to pay income tax on FHSA withdrawals. What's more, you're not required to repay the money you withdraw.
What is the maximum FHSA contribution for 2026?
Contribution room is $8,000 per year with a lifetime limit of $40,000. This starts to accumulate as soon as an FHSA is opened. However, you have up to 15 years or until age 71 to contribute the maximum amount.
Great news!
Unused contribution room accumulates from year to year, just like with an RRSP. If you contribute only $5,000 the first year, for instance, the unused $3,000 will be added to your limit for the next year. You could therefore contribute up to $11,000 the following year ($8,000 base + an additional $3,000).
For how long can you withdraw money from an FHSA?
An FHSA is designed for a short- to medium-term purchase horizon. If you don't buy a property within 15 years after opening the account, you can transfer the funds to an RRSP, tax-free.
Did you know?
To open an FHSA, you must be considered a first-time buyer. This means not having lived in a property you owned in the current or four previous calendar years.
Note this additional criterion: You're also disqualified if you lived with a spouse in a home he or she owned during this period, even if your name wasn't on the deed or mortgage.
How can I use my RRSP under the HBP?
An RRSP (registered retirement savings plan) is first and foremost a simple way to save for retirement, but under the HBP (Home Buyers' Plan), it becomes an invaluable resource for purchasing real estate.
Is an RRSP tax deductible?
Yes. RRSP contributions reduce your taxable income, which can lower your annual tax bill. You can typically contribute 18% of your previous year's earned income up to a maximum of $33,810 for 2026. To find out how much you can contribute, consult your latest federal notice of assessment or log on to My Account on the Canada Revenue Agency website.
What advantages does the Home Buyers' Plan (HBP) offer?
The HBP allows you to withdraw up to $60,000 from your RRSPs ($120,000 for a couple) without immediately paying income tax on this withdrawal. This is an excellent way to finance a down payment with funds you've already accumulated in an RRSP.
HBP repayment rules and limits
The HBP is basically a loan to yourself. You'll have 15 years to repay your RRSP withdrawals, essentially paying back 1/15 of the total due each year. Any missed annual payments will be added to your taxable income for the year.
Furthermore, unlike the FHSA, there is no deadline for using your RRSP under the HBP. Use it whenever you like, no matter how long your account has been open.
Did you know?
You typically have 2 years to start repaying under the HBP. Note that temporary relief measures were introduced for those who used or will use the HBP between 2022 and 2028. In this case, repayment does not have to start until the 5th year following withdrawal. If you withdraw funds in 2026, for instance, you wouldn't have to start repaying them until 2031.
RRSP+ with the Fonds: An HBP asset
An RRSP+ with the Fonds de solidarité FTQ is eligible under the HBP. Its additional tax credits of 30%[1] can help you raise your down payment faster for the same net outlay.
Have you already used the HBP to withdraw funds from an RRSP at a financial institution other than the Fonds? You can repay your HBP by contributing to an RRSP+! The tax credits you earn can help you pay off your HBP faster.
FHSA and RRSP combo: A powerful strategy
There's no need to choose one over the other. If your savings capacity allows, combining an FHSA and the RRSP could maximize tax savings.
Benefit from the flexibility of an FHSA (no repayment) and the power of an RRSP+ (additional tax savings[1]) to boost your down payment. Combining the two plans means possibly being able to withdraw more than $100,000 ($40,000 from the FHSA, plus interest, and $60,000 from the RRSP via the HBP) to purchase your first property.
Need help planning your purchase?
Check out My Game Plan, our interactive tool designed to help you set savings goals and track your progress. Simple and personalized, it guides you step by step in building a down payment to purchase a property.
How to choose
FHSA or RRSP? To help you choose, consider these factors:
- Time horizon: An FHSA must be used within 15 years of opening the account.
- Current savings: Do you already have a well-funded RRSP? The HBP is within your reach.
- Budget: Can you save more than $8,000 a year? Contribute to both plans.
To help you decide, here's a quick comparison of both savings options.
| FHSA | RRSP with the HBP | |
|---|---|---|
| Main objective | First property purchase | Retirement savings + first property purchase |
| Tax-deductible contributions | Yes | Yes |
| Maximum withdrawal (for purchase) | Entire balance ($40,000 plus interest) | $60,000 |
| Repayment | None | Mandatory over 15 years |
| Contribution limit | $8,000/year ($40,000 lifetime) | 18% of annual income up to $33,810 in 2026 |
| Purchase horizon / participation period | Maximum 15 years after opening (up to age 71) | Unlimited (up to age 71) |
| Eligibility | Must not have owned a property or lived with a spouse who owned a property (5 years) | Must not have owned a property or lived with a spouse who owned a property (5 years) and must have contribution room |
| Fonds de solidarité FTQ advantage | Not applicable | 30% tax savings on top of the RRSP deduction[1] |
We can help you buy your first property
Do you have a purchase in mind but don't know where to start? That's perfectly understandable. Every situation is unique, and there are clear reference points to help you move forward. If you are considering the HBP within an RRSP+ or an RRSP with FlexiFonds products, our content and tools can help you better understand your options and structure your savings.
Explore our online resources and move forward at your own pace, based on your needs and priorities. Your goal of homeownership matters, and every step you take today brings you closer to achieving it.
