# FHSA or RRSP: which one for your first home?

> How the FHSA and the RRSP differ for first-time buyers: limits, tax deduction, withdrawals, repayment, with tax saved examples at three incomes.

Both accounts give you a tax deduction when you put money in. The big difference shows up when you take the money out to buy a home: from an FHSA it can come out tax-free and with nothing to repay, and from an RRSP under the Home Buyers' Plan it is a loan you pay back. Here are the differences side by side.

## How do the two accounts compare?

| Item | FHSA | RRSP |
| --- | --- | --- |
| Who can open it | Resident of Canada, 18 or older, first-time home buyer | Anyone with a SIN and earned income, up to the year they turn 71 |
| Yearly limit | $8,000, with unused room carried forward, up to $8,000 more | 18% of last year's earned income, up to $33,810 for 2026, plus unused room |
| Lifetime limit | $40,000 | No lifetime cap, your room builds each year |
| Tax deduction | Yes, in the year you choose | Yes, in the year you choose |
| Withdrawal to buy a first home | Tax-free if it qualifies, nothing to repay | Home Buyers' Plan: up to $60,000 without tax at withdrawal, repaid over time |
| Other withdrawals | Taxable | Taxable |
| Contribution deadline for a year | December 31 | 60 days after the year ends |

## How much tax does each save?

The deduction works the same in both, so $8,000 saves the same tax in either one. Here is what it saves in Ontario at three incomes, based on our [RRSP calculator](https://tax-services.ca/calculators/rrsp-retirement/rrsp-calculator) engine:

| Income | Tax saved by an $8,000 deduction |
| --- | --- |
| $50,000 | $1,674 |
| $80,000 | $2,522 |
| $120,000 | $3,011 |

The amount is not a flat share of the $8,000 because the deduction pushes part of your income into a lower bracket. The [tax brackets page](https://tax-services.ca/canada-tax-brackets) shows where those lines are.

## Which one makes sense first?

If you plan to buy your first home, the FHSA has the cleaner exit, since the money comes out without tax or repayment. The RRSP still helps if you want more room, since the FHSA tops out at $40,000, or if you are unsure about buying. You can use both in the same year, and you can move money from an RRSP to an FHSA, although that transfer does not give you a new deduction.

## What can go wrong?

- You have to be a first-time buyer. The CRA defines it by whether you lived in a home you owned in the current year or the four years before.
- An FHSA closes at the latest 15 years after you open it, at age 71, or the year after your first withdrawal, whichever comes first.
- Over-contributing to either account costs a penalty of 1% a month on the extra amount.

Use the [FHSA calculator](https://tax-services.ca/calculators/rrsp-retirement/fhsa-calculator) for your own numbers, the [down payment calculator](https://tax-services.ca/calculators/mortgage/down-payment) for what you need to save, and read [year-end tax planning](https://tax-services.ca/year-end-tax-planning-canada) for the dates. This is general information and not advice, so check your own situation with the CRA.

## Where does this information come from?

The rules come from the [Canada Revenue Agency](https://www.canada.ca/en/revenue-agency.html) [FHSA page](https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/first-home-savings-account.html) and its RRSP and Home Buyers' Plan pages. The tax saved figures are calculated with our own engine. Checked in October 2026. This is an independent information site: we provide no services, we do not represent the CRA or any organization, and we do not guarantee that anything here is accurate or current. We accept no liability for decisions based on it. Check the official source before you rely on it. See the [full disclaimer](https://tax-services.ca/disclaimer).

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Source: https://tax-services.ca/fhsa-vs-rrsp-canada
Last updated: 2026-10-08
Independent information site. Not affiliated with the CRA. No services, no guarantee of accuracy. See https://tax-services.ca/disclaimer