If you're a first-time buyer saving for a pre-construction home in Ontario, you have two powerful government programs at your disposal: the First Home Savings Account (FHSA) and the RRSP Home Buyers' Plan (HBP). Both let you use registered savings toward your first home. But they work differently — and knowing which to use, and when, can mean the difference between a $60,000 down payment and a $110,000 one. Here is an honest breakdown.

The FHSA — Canada's Most Powerful First-Home Savings Tool

The FHSA (First Home Savings Account) launched in April 2023 and has since become the foundation of first-time buyer savings strategy in Canada. It combines the best features of the RRSP (tax deduction on contributions) and the TFSA (tax-free growth and withdrawal):

  • ✓Contributions are tax-deductible — reduces your taxable income, same as RRSP
  • ✓Growth inside is tax-free — dividends, interest, capital gains not taxed
  • ✓Withdrawals are tax-free — when used for a qualifying first home purchase
  • ✓Annual limit: $8,000 per year (with carry-forward room if contribution room goes unused)
  • ✓Lifetime limit: $40,000 per person

For a couple, the numbers are immediately compelling: $8,000 × 2 = $16,000 per year combined. Over 5 years, a couple who both opened FHSAs the moment they were eligible could accumulate $80,000 in tax-free savings — before any investment growth inside the account.

Critically, the FHSA contribution deduction does not need to be claimed in the year of contribution. You can "bank" deductions and claim them in a higher-income year — maximizing your tax refund at the point where it's most valuable.

The RRSP Home Buyers' Plan — The Original First-Home Tool

The RRSP HBP has existed since 1992. It allows first-time buyers to withdraw up to $35,000 from their RRSP (tax-free, as a loan to themselves) for a qualifying home purchase — with repayment over 15 years starting 2 years after withdrawal.

  • →Per-person maximum: $35,000 (increased from $25,000 in 2024)
  • →Couple maximum: $70,000 combined
  • →RRSP funds must be held for 90 days before withdrawal
  • →Repayment: minimum 1/15 per year, or the un-repaid amount is added to taxable income

90-Day Rule: Contributions must have been in your RRSP for at least 90 days before you withdraw under the HBP. If you're planning to use the HBP, contribute to your RRSP at least 3 months before your planned withdrawal date — don't wait.

The Key Difference: Repayment

This is where the programs diverge most significantly. The FHSA never requires repayment. When you withdraw from the FHSA for your first home, those funds are yours permanently — you've already taken the tax deduction, earned tax-free growth, and now received a tax-free withdrawal. There is no future repayment obligation.

The RRSP HBP is a loan from your future self. The funds must be repaid over 15 years, or the un-repaid amounts are added to your taxable income each year. Missing repayments means a $2,333/year RRSP repayment obligation (on a $35,000 withdrawal) — or $2,333 added to your income if you don't repay.

For most buyers, the FHSA is the superior tool because it creates no future obligation. However, many buyers have accumulated significant RRSP balances already and would like to use those funds. Using both in combination is both permitted and common.

Using Both Together for a Pre-Construction Purchase

There is no rule preventing you from using FHSA and RRSP HBP together on the same purchase. Here is what a maximized scenario looks like for a couple with 5 years of savings history:

FHSA — Person 1 (5 years × $8,000)$40,000
FHSA — Person 2 (5 years × $8,000)$40,000
RRSP HBP — Person 1 (max)$35,000
RRSP HBP — Person 2 (max)$35,000
Total Registered Savings for Down Payment$150,000

Plus investment growth inside the accounts, plus any additional personal savings — a serious couple has a substantial down payment base available entirely through registered savings vehicles.

The FHSA and Pre-Construction Timing

For pre-construction buyers specifically, there is a nuance worth knowing: FHSA withdrawals must occur in the same calendar year as a qualifying purchase, or the year prior. Pre-construction purchases can be tricky because you sign the Agreement of Purchase and Sale years before taking possession.

The CRA's position is that the APS signing date qualifies as the purchase date for FHSA purposes — which means you can withdraw from your FHSA after signing the APS, even if occupancy is 3 years away. Confirm this with your accountant for your specific situation, as the rules can have nuances based on occupancy vs. registration date.

Bottom line: If you are not yet saving in an FHSA, open one today — even if you're not ready to buy. Contribution room accumulates from the account open date. Every year you delay is $8,000 per person in unused room you can never recover.