Can You Use an FHSA and the RRSP Home Buyers' Plan Together in Ontario?

If you are saving for your first home in Ontario, you have probably heard of the First Home Savings Account (FHSA) and the RRSP Home Buyers' Plan (HBP). Many buyers wonder whether they have to pick one. The short answer is that you do not, but each program has its own tests, limits and paperwork.

This article walks through who can open an FHSA, how a tax-free withdrawal works, how the Home Buyers' Plan is repaid, and how the money connects to the minimum down payment. The details can turn on your own facts, so a lawyer or accountant can confirm how they apply to you.

Yes, you can use both for the same home

The FHSA and the RRSP Home Buyers' Plan can be used together for the same qualifying home, as long as you meet all the conditions at the time of each withdrawal. Each program is tested separately, so meeting the rules for one does not mean you meet the rules for the other.

Who can open an FHSA

To open an FHSA you must be a resident of Canada, at least 18 (19 where that is the age of majority), and 71 or younger on December 31 of the year you open it. You must also be a first-time home buyer, meaning you have not lived in a qualifying home you owned or jointly owned as your principal residence in the current calendar year or the previous 4 calendar years.

If you have a spouse or common-law partner, there is an added test. You must also not have lived, in that same window, in a home your spouse or common-law partner owned or jointly owned as your principal residence. That condition does not apply if you have no spouse or partner. So a partner's earlier home can affect you even if you never owned a home yourself.

FHSA limits and a tax-free withdrawal

Participation room is $8,000 in the year you open your first FHSA, and the lifetime limit is $40,000. Unused room may be usable the following year.

A qualifying withdrawal is tax-free and does not have to be repaid, but you must meet all of these conditions:

• You are a first-time home buyer.
• You have a written agreement to buy or build a qualifying home, with completion before October 1 of the year after the withdrawal.
• You acquired the home no more than 30 days before withdrawing.
• You are a Canadian resident.
• You intend to occupy the home as your principal residence within one year.
• You file Form RC725 with your FHSA issuer.

If any condition is not met at the time of withdrawal, the amount is taxable and must be included in your income. Timing matters, so check your closing date against the withdrawal rules before you ask your issuer to release the funds.

The Home Buyers' Plan and how it is repaid

The Home Buyers' Plan withdrawal limit is currently $60,000, and withdrawn amounts must be repaid to your RRSP over up to 15 years.

There is a temporary repayment relief rule. For a first HBP withdrawal made between January 1, 2022 and December 31, 2025, and under an extension for first withdrawals between January 1, 2026 and December 31, 2028, the 15-year repayment period starts in the fifth year after the year of the first withdrawal instead of the second. Because the extension to 2026–2028 is recent, confirm with the Canada Revenue Agency or your accountant that it applies to your withdrawal date.

• The first minimum repayment is about one-fifteenth of the amount withdrawn. After that, the minimum is the remaining balance divided by the years left.
• A repayment counts for a year if you make it in that year or in the first 60 days of the next year, and you designate it on Schedule 7.
• If you do not make the minimum required repayment, the shortfall is added to your income as RRSP income on line 12900 of your return.
• You can repay the full amount at any time, which reduces later minimums.

How the savings connect to your down payment

Together, these plans help you build your down payment. The federal minimum is 5% for homes of $500,000 or less. For homes from $500,000 to $1.5 million it is 5% of the first $500,000 plus 10% of the portion above $500,000. For homes of $1.5 million or more it is 20%.

Below 20% down, you will typically need mortgage loan insurance. For CMHC homeowner mortgage loan insurance, the purchase price must be below $1,500,000. A non-repayable financial gift from a relative is among the traditional down payment sources. Your lender can tell you how your savings, gifts and borrowing fit together.

What to do next

• Confirm you meet the FHSA residency, age and first-time buyer tests, including your spouse's or partner's housing history.
• Open the FHSA early, since room is tied to when you open it.
• Check your closing date against the October 1 completion rule and the 30-day window.
• Decide how much to take from each plan and note your repayment obligations for the HBP.
• Ask your FHSA issuer about Form RC725 and keep your written agreement of purchase and sale.
• Review the agreement and closing timeline with a lawyer, and tax questions with an accountant.

Frequently asked questions