Are you saving for your first home? The Home Buyers’ Plan (HBP) can help. This federal program allows eligible first-time buyers to withdraw funds from a registered retirement savings plan (RRSP) to purchase or build a qualifying home.
Earlier in 2024 the HBP was updated. Below is an overview of the changes and how the HBP can work alongside other savings tools—such as the first home savings account (FHSA), a tax-free savings account (TFSA), and notice-style savings accounts—to help you reach your down payment goal.
How has the Home Buyers’ Plan changed?
There are two important updates to the HBP. First, the maximum RRSP withdrawal for an individual has increased from $35,000 to $60,000, effective mid-April 2024. Couples can now access up to $120,000 combined. Second, repayment timelines have been temporarily relaxed: for HBP withdrawals taken between Jan. 1, 2022 and Dec. 31, 2025, borrowers now have five years before repayments must begin, instead of the previous two-year grace period. The total repayment schedule remains 15 years, with annual minimum repayments equal to one-fifteenth of the amount withdrawn.
These adjustments were introduced as part of measures announced in the 2024 federal budget to help improve housing affordability.
Combining the HBP and the FHSA to buy a home
The first home savings account (FHSA) launched recently to give first-time buyers additional tax-advantaged room to save for a down payment. The FHSA provides up to $40,000 of tax-free contributions for eligible buyers. Contributions are tax-deductible, investment growth is sheltered from tax, and qualifying withdrawals to buy a first home are tax-free—making the FHSA a complementary tool to the HBP.
The FHSA contribution limit is $8,000 per year, with unused contribution room carried forward for one year. By making regular FHSA contributions, eligible savers quickly build toward the full $40,000 limit. If you contribute the maximum to an FHSA and also withdraw the full amount available under the HBP, an individual could assemble up to $100,000 for a down payment; couples could double that amount.
FHSAs can remain open for up to 15 years or until the end of the year in which the account holder turns 71. If you decide not to use the FHSA balance for a home purchase, the funds can typically be transferred to an RRSP or a registered retirement income fund (RRIF) on a tax-deferred basis, or withdrawn and included in taxable income.
What can you hold inside an FHSA?
FHSAs can hold cash deposits and qualifying investments. For savers who want to preserve capital while earning some return, low-risk options such as guaranteed investment certificates (GICs) or interest-bearing FHSA savings accounts are sensible choices. Some accounts offer competitive interest rates on cash balances and CDIC protection where applicable.
Where else can you earn interest while saving for a home?
If you reach your FHSA contribution limit and still need a place to grow cash for a down payment, consider other registered and non-registered options. A TFSA remains one of the most flexible tax-advantaged vehicles: contributions grow tax-free and withdrawals are tax-free for any purpose. Contribution room for a TFSA accumulates starting at age 18 and is adjusted periodically by the government.
Notice-style savings accounts are another option for savers seeking higher interest than typical chequing or basic savings accounts. These accounts pay tiered rates in exchange for a short notice period before withdrawals—commonly 10 or 30 days—so they require modest planning but can deliver returns comparable to short-term GICs while keeping funds more accessible.
Notice-style savings account example
- Monthly fee: $0
- Sample interest rates: tiered rates available for 10- or 30-day notice terms (rates may change)
- Minimum balance: none specified
- Eligible for CDIC coverage: where applicable
Example account interest is typically calculated daily and paid monthly. Rates are quoted on an annual basis and may change without notice.
Many Canadians may be leaving interest on the table
A recent survey found that most Canadians save for short- or medium-term goals such as travel, an emergency fund or home renovations, yet many keep money in ordinary chequing or basic savings accounts that offer little or no interest. If your savings sit in low-yield accounts, inflation can erode purchasing power over time. Choosing higher-yield savings vehicles that match your accessibility needs can help your money grow while you prepare for a home purchase.
When selecting savings products, consider factors such as fee structure, whether the offered interest rate is promotional or sustainable, and any withdrawal conditions that might affect your plans. Read product terms carefully and compare options to find a solution that fits your timeline and risk tolerance.
How much more will you need for a down payment?
Home prices vary widely across Canada. To illustrate how the HBP and FHSA might reduce your required cash, the following table lists benchmark home prices and estimated 20% down payments for selected cities as of June 2024, alongside the hypothetical maximum combined HBP + FHSA down-payment funds available to an individual or couple. The figures show how much additional cash would be needed to reach a 20% down payment after using those programs.
| City | Average home price June 2024 | 20% down payment | Max. HBP + FHSA: individual | Max. HBP + FHSA: couple | Additional funds needed for 20% down: individual | Additional funds needed for 20% down: couple |
| Vancouver | $1,207,100 | $241,420 | $100,000 | $200,000 | $141,420 | $41,420 |
| Victoria | $872,800 | $174,560 | $100,000 | $200,000 | $74,560 | n/a |
| Calgary | $589,000 | $117,800 | $100,000 | $200,000 | $17,800 | n/a |
| Edmonton | $401,100 | $80,220 | $100,000 | $200,000 | n/a | n/a |
| Regina | $318,100 | $63,620 | $100,000 | $200,000 | n/a | n/a |
| Winnipeg | $362,700 | $72,540 | $100,000 | $200,000 | n/a | n/a |
| Toronto | $1,110,600 | $222,120 | $100,000 | $200,000 | $122,120 | $22,120 |
| Ottawa | $647,700 | $129,540 | $100,000 | $200,000 | $29,540 | n/a |
| Montreal | $537,700 | $107,540 | $100,000 | $200,000 | $7,540 | n/a |
| Halifax | $548,800 | $109,760 | $100,000 | $200,000 | $9,760 | n/a |
Factor in all ongoing costs of home ownership
Using the HBP, FHSA and other savings vehicles can bring you closer to a down payment, but remember to account for the full cost of buying and owning a home. Upfront and ongoing expenses include land transfer taxes, legal fees, moving costs, mortgage payments, property taxes, maintenance, condo or strata fees, utilities, title insurance and home insurance. If you use the HBP, repayment obligations begin after the designated grace period and will add to your annual budget. Don’t forget everyday household costs like groceries, transportation, child care and retirement savings when you assess affordability.
Planning carefully and being realistic about what you can afford will help ensure home ownership remains a positive experience rather than a financial strain.
About the survey
The consumer survey cited was conducted in April 2024 among a representative sample of Canadians. Results provide a snapshot of saving habits and preferences for short- and medium-term goals.
This article is sponsored.
This is a paid post intended to inform readers and may reference a client’s product or service. It was written, edited and produced by the publisher with input from the client.
Further reading on savings
- Unsure about buying a home? Why you should open an FHSA now anyway
- How to save money in Canada: a flexible new option that offers higher interest
- An alternative to GICs: a notice-style savings account that pays competitive interest
- Should you take a promotional rate? How to check the fine print before you decide
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