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Saving for Your First Home

Buying Your First Home? Learn the Smartest Ways to Save, and What Most Canadians Overlook.

With home prices high and mortgage rules changing, it’s more important than ever to use every tool available to you. Discover how the RRSP Home Buyers’ Plan and the new FHSA can fast-track your down payment, and how to use them strategically.

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Top 5 Questions About Saving for Your First Home

With Answers

1. What’s the Difference Between an RRSP Home Buyers’ Plan and a FHSA?

Both are government-backed savings plans designed to help first-time homebuyers, but they work differently:

 

› RRSP Home Buyers’ Plan (HBP) lets you withdraw up to $35,000 from your RRSP tax-free to buy or build your first home. You must repay it over 15 years.

 

› First Home Savings Account (FHSA) allows you to contribute up to $8,000 per year (max $40,000) and withdraw both contributions and investment growth tax-free, no repayment required.

Here’s the smart play: You can use both programs together to maximize your tax-free down payment power.

*Amount could be higher if both FHSA accounts have benefited from capital growth.

2. Am I Eligible to Use These Programs, or Am I Already Disqualified?

Here’s how eligibility works:


✓ RRSP HBP:
  • You must be considered a first-time homebuyer (you haven’t owned a home that was your principal residence in the last 4 years).
  • You must enter into a written agreement to buy or build a qualifying home.
  • You must be a Canadian resident and plan to occupy the home as your principal residence within one year.
✓ FHSA:
  • You must be a Canadian resident between ages 18 and 71.
  • You must be a first-time homebuyer (not lived in a home you or your spouse owned in the last 4 years).
  • You don’t need to have a home purchase lined up yet to open or contribute to an FHSA.

Even if you owned a home in the past, you might still qualify again under the 4-year rule. We can help you confirm eligibility.

3. Which Account Should I Prioritize: RRSP or FHSA?

That depends on your income level, timeline to buy, and tax situation.

 

› If your income is high now, contributing to an RRSP gives you a larger tax deduction, helping you get a bigger refund.

 

› If you’re early in your career with lower income, the FHSA is a great way to grow tax-free savings without affecting your RRSP room, and you don’t have to repay it like the HBP.

 

› If you have enough cash flow, it may be ideal to contribute to both: put RRSP contributions toward the HBP and maximize your FHSA, then use them together when you’re ready to buy.

We can model different scenarios to find the smartest mix for your unique financial picture.

4. What Happens If I Don’t End Up Buying a Home?

› With the FHSA, you can transfer the funds tax-free into your RRSP if you don’t use it within 15 years (or by age 71). No taxes. No lost contribution room.

 

› With the RRSP HBP, if you don’t buy a home or you don’t repay the funds, you’ll have to include the unpaid amounts as taxable income in future years.

 

Either way, the money you’ve saved still supports your long-term goals, whether that’s buying a home later or building retirement savings.

It’s a win either way, if your strategy is structured with flexibility.
5. How Can a Financial Advisor Help Me Maximize These Programs?

A qualified advisor helps you go beyond the basic facts, and make the strategy work for your life.

 

Here’s how we help first-time buyers:

 

› Create a custom savings plan based on your timeline and budget

› Determine your optimal contribution strategy to minimize tax and maximize growth

› Guide you through withdrawal and repayment rules (many people get this wrong!)

› Help you decide when to invest vs. save conservatively

› Assist in coordinating with your mortgage broker or realtor for a seamless buying experience

You’re not just saving money, you’re making one of the biggest purchases of your life. It pays to have the right plan in place.

Pro Tips for First-Time Buyers

Start your FHSA even if you don’t have a down payment saved yet, unused room carries forward.

Use your tax refund from RRSP contributions to re-invest into your FHSA.

Avoid over-contributing, the FHSA has penalties if you exceed the limit.

Know the exact withdrawal process: you’ll need forms signed by a lawyer or notary to prove your home purchase.

Talk to your advisor about how investing inside the FHSA works, don’t just leave it in cash.

Still Have Questions?

Reach out to get clear, personalized answers from our trusted professionals.