FHSA + Home Buyers’ Plan: How to Get the Best Down Payment in Ontario

Some first-time buyers know there might be a government savings program out there for first-time homebuyers in Ontario. Even less know about both — and almost nobody knows you can use them together for the same home purchase.

If you’re planning to buy your first home in the Niagara region, understanding how to combine the First Home Savings Account (FHSA) and the RRSP Home Buyers’ Plan (HBP) could add tens of thousands of dollars to your down payment, tax-free.

Here’s exactly how it works.

What Is the First Home Savings Account (FHSA)?

The First Home Savings Account is a registered savings account introduced by the Canadian government specifically for first-time homebuyers. It combines the best features of an RRSP and a TFSA:

• Contributions are tax-deductible (like an RRSP) — you reduce your taxable income in the year you contribute
• Withdrawals for a qualifying home purchase are tax-free (like a TFSA) — no repayment required
• Annual contribution limit: $8,000
• Lifetime contribution limit: $40,000
• Must be under age 40 to open; unused room does not carry forward beyond the year

The FHSA is one of the most powerful first-time buyer tools Canada has introduced in decades. But it works best when paired with the HBP.

What Is the RRSP Home Buyers’ Plan (HBP)?

The Home Buyers’ Plan lets first-time buyers withdraw from their RRSP to fund a home purchase — without triggering tax at the time of withdrawal. Here’s the key details:

• Maximum withdrawal: $60,000 per person ($120,000 for a couple buying together)
• The funds must have been in the RRSP for at least 90 days before you withdraw them
• Repayment: you have 15 years to repay the withdrawal back into your RRSP (starting 2 years after the year of withdrawal). If you don’t repay in a given year, that year’s share is added to your taxable income.
• First-time buyer definition: you or your spouse/common-law partner cannot have owned a principal residence in the previous 4 years

Can You Use the FHSA and HBP Together?

Yes — and this is where the real opportunity is. The federal government explicitly allows you to use both the FHSA and the Home Buyers’ Plan for the same home purchase. This means a single first-time buyer can access:

• Up to $40,000 tax-free from their FHSA
• Up to $60,000 tax-free from their RRSP via the HBP
• Total: up to $100,000 per person toward a down payment

For a couple buying together, that’s potentially $200,000 in combined tax-advantaged down payment capacity — before factoring in any other savings.

On a $500,000 home in Niagara, a $100,000 down payment represents 20% – this is the conventional mortgage threshold, and has a whole bunch of advantages, if you can afford to make this large of a down payment. It isn’t necessary, but will make purchasing your first home much easier.

What Other Programs Apply for Ontario First-Time Buyers?

The FHSA and HBP stack pairs well with several other first-time buyer benefits:

• First-Time Home Buyers’ Tax Credit: claim $10,000 on your tax return in the year of purchase for a non-refundable tax credit worth up to $1,500
• Ontario Land Transfer Tax Rebate: up to $4,000 rebate for first-time buyers (covers the full provincial LTT on homes priced under approximately $368,000; partial credit on higher amounts)
• 30-Year Amortization on Insured Mortgages: available since December 2024 for insured mortgages (less than 20% down), reducing monthly payments and improving qualification numbers
• GST/HST New Home Rebate: for new builds or substantially renovated homes used as a primary residence — federal rebate of up to approximately $24,000

How to Build Your FHSA Strategy

The sooner you open an FHSA, the better — even if you aren’t planning to buy for a year or two. Here’s why:

1. Open the account as soon as possible. Contribution room begins accumulating from the date you open the account, not from your birth year.
2. Max out your contributions annually. At $8,000/year, it takes 5 years to reach the $40,000 lifetime maximum. Start early.
3. Invest the funds inside the FHSA. The account can hold the same investments as an RRSP — growing your down payment tax-free.
4. Combine with RRSP contributions. Maximize your RRSP in parallel, ensuring the HBP funds are on deposit for at least 90 days before you plan to withdraw.
5. Talk to your mortgage agent before you withdraw. The sequence and timing of withdrawals can affect your qualification — a good mortgage agent will help you coordinate the two accounts optimally.

Frequently Asked Questions — FHSA and Home Buyers’ Plan Ontario

Can I use both the FHSA and RRSP Home Buyers’ Plan for the same home purchase?

Yes. The federal government explicitly allows first-time buyers to use both the FHSA (up to $40,000 tax-free) and the RRSP Home Buyers’ Plan (up to $60,000 tax-free) for the same qualifying home purchase. Combined, an individual can access up to $100,000, and a couple can access up to $200,000.

Do I have to repay the FHSA after I buy a home?

No. Unlike the RRSP Home Buyers’ Plan (which requires repayment over 15 years), qualifying withdrawals from an FHSA for a home purchase are completely tax-free with no repayment requirement.

What is the maximum FHSA contribution in Ontario?

The FHSA has an annual contribution limit of $8,000 and a lifetime limit of $40,000. Unused annual room can carry forward by one year (e.g., if you contribute $0 in year one, you can contribute $16,000 in year two). You must be a Canadian resident and a first-time buyer to be eligible.

How long do RRSP funds need to be on deposit before I can use the Home Buyers’ Plan?

Funds withdrawn under the Home Buyers’ Plan must have been in your RRSP for at least 90 days before the withdrawal. If you deposit funds and immediately withdraw them, the deposit will not be deductible and the withdrawal may not qualify under the HBP.

Who counts as a first-time buyer for the FHSA and HBP?

Under both programs, you are considered a first-time buyer if you have not owned a home that you used as your principal residence at any time during the preceding four calendar years. You must also be a Canadian resident. Note that the definition can differ slightly between the two programs — confirm eligibility with your mortgage agent.