Can You Use FHSA and HBP Together in Canada to Buy a Home?

If you’ve been saving to buy your first home, you’ve likely explored the best ways to grow your savings and build a meaningful down payment. You may also have investigated programs available to first-time buyers—every bit of help matters in today’s competitive housing market.

One relatively new option is the First Home Savings Account (FHSA). Launched in Canada in April 2023, the FHSA is a tax-advantaged registered account created specifically to help first-time home buyers save for a down payment. Account holders can contribute up to $8,000 per year, with a lifetime contribution limit of $40,000 (and up to $80,000 combined for couples who both qualify as first-time buyers). When used to buy a qualifying first home, both contributions and withdrawals are tax-free, including any income earned inside the account from interest, dividends, or capital gains. The FHSA is available through a variety of financial institutions.

Because Canada already had programs for first-time buyers—most notably the Home Buyers’ Plan (HBP)—many people wonder how the FHSA fits alongside existing tools. The following explains how these programs work and how they can be used together to increase your buying power.

How the FHSA and HBP work together

The Home Buyers’ Plan has been available to Canadians since 1992 and allows eligible individuals to withdraw funds from an RRSP tax-free to help buy a qualifying home. Under recent federal changes, the HBP withdrawal limit increased from $35,000 to $60,000 for withdrawals made after April 16, 2024. A qualifying home includes most residential properties—condominiums, townhouses, semi-detached or detached houses—whether newly built or previously owned. To use the HBP you must be a first-time home buyer (typically defined as someone who hasn’t owned a home in the previous four years) and meet residency requirements. If you are purchasing with a spouse or common-law partner, you must ensure neither of you owned and lived in a home during that four-year period.

When you withdraw RRSP funds under the HBP, you effectively take a loan from your retirement savings and must repay that amount back into an RRSP over a set period. The repayment period begins after the repayment grace period—recently extended from two years to five—and you then have up to 15 years to complete repayment under the HBP rules.

There was early uncertainty about whether the FHSA could be combined with the HBP, but the government clarified that the two programs can be used together provided you meet all eligibility and program conditions. Practically speaking, that means you can use both accounts to fund a down payment without triggering income tax on those withdrawals. For example, if you have $60,000 available through the HBP and $25,000 saved in an FHSA, you could allocate $85,000 toward a qualifying down payment tax-free. You would still need to re-contribute the HBP amount back to your RRSP over the HBP repayment period to satisfy that program’s rules.

Tax benefits and the Home Buyers’ Tax Credit

In addition to the FHSA and HBP, first-time buyers in Canada may be eligible for the Home Buyers’ Tax Credit (HBTC). This non-refundable tax credit provides a modest tax relief—equivalent to up to $1,500 for eligible purchasers—which can offset some costs associated with buying your first home. The HBTC can be claimed when you meet the eligibility criteria and complete the required tax reporting in the year of purchase.

Maximizing buying power with multiple programs

Buying your first home involves many steps and choices, but carefully combining available programs can increase your purchasing power and make a broader range of properties affordable. Using the FHSA to shelter savings growth and the HBP to access RRSP funds—along with claiming the Home Buyers’ Tax Credit where eligible—can help you assemble a larger down payment while minimizing tax impact. This combined approach may help you move into your first home sooner or expand the neighborhoods and property types within your budget.

As with any financial decision, confirm you meet the eligibility rules for each program and understand repayment requirements and timelines. If you’re unsure how these accounts interact with your overall financial plan, consider speaking with a qualified advisor or the financial institution that holds your accounts to ensure you’re using these tools effectively.

More about real estate:

• How first-time home buyers can use an FHSA to save for a down payment
• Can a first-time home buyer have a mortgage co-signer?
• Best FHSAs in Canada: Where to get the new first home savings account
• First home savings account: A Gen Z guide to achieving home ownership