Home Buyers' Plan vs FHSA: Can You Use Both in Ontario?

If you are saving for a first home in Ontario, two federal tools come up again and again: the Home Buyers' Plan (HBP), which lets you borrow from your own RRSP, and the First Home Savings Account (FHSA), a registered account built for a first home. People often ask whether they have to pick one.

The short answer is that you often do not. This article explains how each plan works, how they fit together, and where timing and repayment rules can cause problems. It is general information, and a lawyer or accountant can confirm how it applies to your numbers.

How the two plans differ at a glance

The FHSA is a registered plan that lets a first-time home buyer save tax-free for a qualifying first home, up to set limits. The HBP is different: it is a withdrawal from your RRSP for a home, and the money has to be put back over time.

Can you use both for the same home?

Yes. You can use an HBP RRSP withdrawal and a qualifying FHSA withdrawal for the same home, as long as you meet all the conditions at the time of each withdrawal. Each withdrawal has its own conditions, including a written agreement to buy or build a qualifying home and first-time buyer status, so check them for each one.

The two plans stay separate after that. HBP repayments cannot be made with FHSA funds, and FHSA funds cannot be designated as an HBP repayment. So if you move RRSP money into an FHSA, you are not repaying the HBP by doing so.

One related point: transfers from an RRSP to an FHSA are not deductible. If you are thinking about shifting money between the two, talk to an accountant first.

Who qualifies and where people get caught

Both plans use a first-time buyer test based on the current calendar year and the previous four. For the FHSA, you are a first-time buyer if you did not live in a home you owned, alone or jointly, as your principal residence in that period, and a spouse or common-law partner's ownership in that period also counts against you. The HBP test is similar, with the 30 days before the withdrawal excluded, and your current spouse or partner is tested the same way.

• A written agreement to buy or build a qualifying home is needed for the HBP when you withdraw, and a pre-approved mortgage does not count.
• For an FHSA qualifying withdrawal you also need a written agreement, and you must not have acquired the home more than 30 days before the withdrawal.
• You must intend to occupy the home as your principal residence within one year of buying or building it, under both plans.
• The home must be acquired or built before October 1 of the year after the year of your first HBP withdrawal.
• HBP withdrawals only come from RRSPs where you are the annuitant, and locked-in and group RRSPs generally do not qualify.

To open an FHSA you also need to be a Canadian resident, at least 18 (19 in some provinces and territories), and not older than 71 at December 31 of the year you open it.

Timing, repayment and the 89-day rule

HBP withdrawals are only allowed in the calendar year of your first withdrawal and in January of the following year. Plan the dates around your closing, not the other way around.

If you recently contributed to your RRSP, watch the so-called 90-day rule. It is actually an 89-day window: you cannot deduct the amount by which your RRSP contributions in the 89 days before an HBP withdrawal exceed the RRSP's fair market value after the withdrawal, and contributions designated as HBP repayments are not caught.

HBP repayment takes 15 years and normally starts in the second year after the withdrawal. For first withdrawals from January 1, 2026 to December 31, 2028, the start is deferred to the fifth year after the year of the first withdrawal, so a 2026 first withdrawal means repayments begin in 2031. Because CRA pages have described this relief differently, confirm the start year with CRA or an accountant.

Each year's minimum is the remaining balance divided by the years left, for example $16,500 divided by 15 is $1,100. You repay by contributing to your own RRSP, PRPP or SPP in the year or the first 60 days of the next and designating it on Schedule 7. If you repay less than the minimum, the shortfall is added to your income on line 12900. CRA sends a statement of account with your notice of assessment showing your balance and the minimum due next year.

You must also repay any earlier HBP balance before a new HBP withdrawal, or the new amount is taxed as a regular RRSP withdrawal.

A sensible order of operations

There is no single correct order, because it depends on your income, your RRSP and how soon you plan to buy. These are the points that usually drive the decision.

• FHSA room builds each year: unused room carries forward, up to $8,000, so the most you can contribute in one year is $16,000, and the $40,000 lifetime limit does not rise.
• Overcontributing triggers a tax of 1% per month on the highest excess amount in that month.
• An FHSA must be closed by December 31 of the earliest of the 15th anniversary of opening your first FHSA, the year you turn 71, or the year after your first qualifying withdrawal.
• Opening an FHSA early starts your room accumulating, since the annual limit applies from the year you open your first one.

Because the FHSA closing deadline can be as early as the end of the year after your first qualifying withdrawal, plan your withdrawal timing with that deadline in mind.

What to do next

• Check your first-time buyer status for yourself and your spouse or partner using the five-year test.
• Find out your FHSA room and your RRSP balance, and note whether any RRSP is locked-in or a group plan.
• Confirm with your issuer how to open an FHSA and give them your SIN and date of birth accurately, since wrong information can lead to the registration being revoked back to the opening date.
• Get the written agreement to buy or build in place before you withdraw, then complete Form RC725 for the FHSA and give it to your issuer.
• Ask an accountant to map out HBP repayment dates, and ask your real estate lawyer to review the purchase agreement and closing timeline.

Frequently asked questions