How to Save for a Down Payment in Canada (FHSA + HBP Strategy)

The good news: Canada now has two powerful government programs built specifically to help first-time buyers like you get to a down payment faster. The First Home Savings Account (FHSA) and the Home Buyers’ Plan (HBP) both offer real tax advantages. And used together, they can be the difference between scraping together a minimum down payment and walking into your first home with real financial footing.

This guide will show you how both programs work, how to combine them strategically, and how to build a realistic savings plan with actual numbers.

How Much Do You Actually Need?

Before we talk strategy, let’s talk targets — because the number you’re saving toward determines how aggressive your plan needs to be.

In Canada, minimum down payments are:

• 5% on the first $500,000 of a home’s purchase price
• 10% on any portion between $500,000 and $999,999
• 20% on homes priced at $1,000,000 or more (no mortgage insurance available above this threshold)

For a $650,000 home — roughly the national benchmark price as of early 2026 — the minimum down payment works out to about $40,000. But most financial planners and mortgage advisors recommend putting down at least 10–20% where possible, which on a $650,000 home means saving $65,000 to $130,000.

That’s a lot. But with the right accounts and a consistent savings habit, it’s very achievable — and the FHSA + HBP combination can accelerate your timeline significantly. If you want a deeper look at how mortgages actually work before diving into your savings plan, see our guide to how mortgages work in Canada.

The FHSA: The Best Account for First-Time Buyers

The First Home Savings Account was introduced by the federal government in 2023, and it’s genuinely one of the best savings vehicles ever created for first-time buyers. Here’s why: it combines the tax deduction of an RRSP with the tax-free withdrawal of a TFSA — and you keep both benefits as long as you’re buying a qualifying home.

Key FHSA rules:

The key distinction from the HBP

FHSA withdrawals for a qualifying home purchase don’t need to be repaid. The money is yours, tax-free.

One important rule

Contribution room only starts accumulating once you open the account. If you open your FHSA today and do nothing else, you’re still building room. Open it as early as possible — even if you can only contribute a small amount right now.

For FHSA accounts, both EQ Bank and Wealthsimple are strong options. EQ Bank offers a high-interest FHSA savings account — great if you’re buying in the next 1–3 years and want to minimize risk. Wealthsimple lets you invest your FHSA in ETFs, which makes more sense if your timeline is 3–5+ years and you’re comfortable with some market exposure.

The HBP: Borrowing From Your RRSP

The Home Buyers’ Plan is a long-standing federal program that lets first-time buyers withdraw money from their RRSP to put toward a down payment. Think of it as an interest-free loan from your future self.

Key HBP rules:

The critical point

The HBP withdrawal must come from an RRSP. This is a common source of confusion. If your savings are sitting in a TFSA or a regular savings account, those funds are not eligible for the HBP. You need to have been contributing to an RRSP — and those contributions generally need to have been in the account for at least 90 days before withdrawal.

On repayment

After using the HBP, you repay the withdrawn amount back into your RRSP over 15 years — at a minimum of 1/15 of the total each year. If you withdrew $30,000, your minimum annual repayment is $2,000. Miss a repayment, and that amount gets added to your taxable income for the year.

One more thing on timing

A temporary federal measure applied to those who made HBP withdrawals between January 1, 2022 and December 31, 2025, giving them five years (rather than two) before repayments had to begin. If you’re planning a withdrawal in 2026 or later, confirm the current repayment start date with CRA, as this temporary measure may not apply.

For RRSP accounts, both EQ Bank and Wealthsimple offer competitive options. EQ Bank’s RRSP savings account is excellent for preserving capital when your purchase is near. Wealthsimple’s RRSP lets you invest in a managed or self-directed portfolio — better suited if you have a longer runway before buying.

FHSA vs. HBP: How They Compare

The FHSA wins on simplicity and flexibility. The HBP gives you access to more money if you have RRSP savings already built up. The real power is using them together.

The Combined Strategy: FHSA + HBP Together

The moment you know you’re going to buy a home — even if it’s 5 years away — open an FHSA. Contribution room accumulates from the date you open the account, not the date you contribute. Opening it now and contributing $1 is better than waiting until you have more money.

Prioritize the FHSA over the RRSP for home savings. Why? Because FHSA withdrawals don’t need to be repaid. The $8,000/year deduction also reduces your taxable income immediately, often generating a tax refund you can reinvest.

If your combined household income is $110,000 and you’re in a ~33% marginal tax rate, contributing $8,000 to your FHSA could generate roughly $2,600 back at tax time. Put that refund back into your FHSA or RRSP and you’re compounding the benefit. Not sure whether to invest a lump sum or spread contributions out? See our breakdown of lump sum vs dollar-cost averaging in Canada.

Once your FHSA contributions are maximized (or running at full capacity), direct additional savings into an RRSP. Remember: the HBP withdrawal must come from an RRSP — and funds need to have been in the account for at least 90 days before you withdraw. So start early.

Contributing to an RRSP also reduces your taxable income. A couple each contributing $10,000/year to their RRSPs could save $6,000–$7,000 in combined income tax annually, depending on their tax brackets — money that can be redirected back into savings. Once your RRSP is open, see our guide on what to hold in an RRSP to make sure your contributions are working as hard as possible.

Not every dollar going toward your down payment needs to be in an FHSA or RRSP. If you’re buying in 1–2 years, keep a portion in a high-interest savings account (HISA) where it’s safe and accessible. Check out our guide to the best high-interest savings accounts in Canada to find the best current rates.

When you’ve signed a purchase agreement:

1. Withdraw your full FHSA balance first (no repayment, no tax)
2. Then withdraw from your RRSP under the HBP (up to $60,000 per person)
3. Combine both with any additional savings for your total down payment

Real Example: How a Toronto Couple Saves $90,000+

On a $650,000 home, a $99,000 down payment is just over 15% — enough to significantly reduce CMHC mortgage insurance premiums compared to a 5% down payment, and to meaningfully lower their monthly mortgage payment.

This scenario assumes consistent contributions and modest 4% annual growth inside their accounts. Actual results will vary based on investment choices and market performance. The tax refunds in this example are illustrative — your actual refund depends on your marginal tax rate and other deductions.

What to Do With Your FHSA If You Don’t End Up Buying

Life changes. Maybe you decide renting makes more sense, move provinces, or simply don’t find a home you want to buy. Here’s the good news: your FHSA money isn’t lost.

If you don’t use your FHSA for a qualifying home purchase, you can transfer the full balance — contributions and growth — directly to your RRSP or RRIF, tax-free. You don’t need any extra RRSP contribution room for this transfer, and it doesn’t trigger any income tax.

The only catch: the FHSA must be closed within 15 years of opening it, or by the end of the year you turn 71. Plan accordingly, but don’t let the fear of “what if I don’t buy” stop you from opening one. In the worst case, you’ve made tax-deductible contributions that transfer seamlessly into your retirement savings.

HBP Repayment: What to Expect After You Buy

You repay the withdrawn amount back into your RRSP over 15 years. The minimum annual repayment is 1/15 of what you withdrew. If you withdrew $48,000 under the HBP, your minimum annual repayment is $3,200.

You make regular RRSP contributions and designate a portion as your HBP repayment when filing your taxes. You can always pay back more than the minimum — there’s no penalty for accelerating repayments.

The missed minimum amount is added to your taxable income for that year and taxed at your marginal rate. This isn’t catastrophic, but it erodes one of the main benefits of using the HBP in the first place.

Budget your annual HBP repayment into your post-purchase cash flow plan. Think of it as a mandatory line item — because it is. Many couples roll this into their regular RRSP contributions so it becomes automatic.

How to Get Started: A Simple Checklist

Where to Open Your Accounts

Choosing the right institution matters — especially for the interest rate on your FHSA savings account or the investment options inside your RRSP.

For a deeper look at digital banking options in Canada, see our guide to the best digital banks in Canada.

The Bottom Line

When you’re ready to buy, our guide to buying a home in Canada walks through every stage — from pre-approval and closing costs to what owning actually costs month to month.

Frequently Asked Questions

Can I use both the FHSA and HBP for the same home purchase?

Yes. The CRA explicitly allows you to use both programs for the same qualifying home purchase. You can withdraw your full FHSA balance tax-free and also make an HBP withdrawal from your RRSP — all toward the same down payment.

Do I need to repay my FHSA withdrawal?

No. FHSA withdrawals for a qualifying home purchase are completely tax-free and do not require repayment. This is the key advantage over the HBP.

What qualifies as a first-time home buyer for these programs?

For both the FHSA and HBP, you cannot have owned a home that you lived in at any point during the current calendar year or in any of the four preceding calendar years. In other words, you haven’t lived in a home you owned in the last five years.

Can my spouse and I both use the HBP?

Yes. Each person can withdraw up to $60,000 from their own RRSP under the HBP, for a combined maximum of $120,000. Each person must meet the eligibility requirements individually.

What happens if I withdraw from my RRSP and it hasn’t been in there for 90 days?

Contributions that have been in your RRSP for less than 90 days are generally not eligible for HBP withdrawal. Plan ahead — make contributions well before you anticipate needing to withdraw.

Can I contribute to an FHSA and claim the deduction in the same year?

Yes, as long as the contribution is made between January 1 and December 31 of that tax year. Unlike RRSPs, there is no “first 60 days” rule for FHSAs — the contribution must be in the account by December 31 to count for that tax year.

What if I open an FHSA but decide not to buy a home?

Your FHSA balance can be transferred to your RRSP or RRIF tax-free — with no impact on your existing RRSP contribution room. The only requirement is that you close the FHSA within 15 years of opening it, or by the end of the year you turn 71.

Should I invest my FHSA or keep it in a savings account?

It depends on your timeline. If you’re buying in 1–2 years, a high-interest savings account inside your FHSA is the safer choice — you don’t want a market dip to shrink your down payment right before you need it. If you’re 3–5+ years out, investing in a balanced or conservative ETF portfolio inside your FHSA can meaningfully grow your savings.