TFSA vs RRSP vs FHSA
Where to park down-payment savings. FHSA wins for first-time buyers because it stacks the RRSP deduction with the TFSA's tax-free withdrawal — no other account in Canada offers both.
Your scenario
Result
FHSA is capped at $8k/yr and $40k lifetime. Beyond that, use TFSA. RRSP HBP supplements for first-home use without permanent tax.
Why FHSA wins for first-home savings
The First Home Savings Account is the only registered account in Canadian tax law that combines BOTH the RRSP-style deduction (going in) with the TFSA-style tax-free withdrawal (coming out). No other account offers both — that's why this calculator almost always shows FHSA winning.
Worked comparison
$8,000 annual contribution, 35% marginal tax rate, 6% expected return, 8-year horizon:
- FHSA: Tax-deductible going in ($2,800/yr refund × 8 = $22,400 saved), tax-free withdrawal. Net result ≈ $103,000.
- TFSA: After-tax contribution, tax-free growth + withdrawal. Net result ≈ $79,000.
- RRSP: Tax-deductible going in, fully taxed at withdrawal (under HBP, repaid over 15 years; outside HBP, taxed as income). Net for first-home use ≈ $79,000 (similar to TFSA after refund nets out).
FHSA mechanics + contribution rules
- $8,000 per year contribution limit
- $40,000 lifetime contribution limit
- Unused contribution room carries forward up to $8,000 (max $16,000 in any single year)
- Contributions are tax-deductible — claim in any future year for maximum tax savings
- December 31 contribution deadline (NOT the RRSP 60-day window)
- 15-year maximum account life (close at age 71 or 15 years after opening)
Stacking with RRSP HBP
A first-time buyer can use BOTH the FHSA AND the RRSP Home Buyers' Plan simultaneously:
- FHSA: up to $40,000 lifetime (tax-deductible going in, tax-free coming out, no repayment required)
- RRSP HBP: up to $60,000 per person (no permanent tax if repaid; 15-year repayment schedule)
- Combined: up to $100,000 of tax-advantaged first-home down payment per person
- For couples: up to $200,000 combined
What if I'm not buying a first home?
If your home-buying plans change, the FHSA still has options:
- Roll into your RRSP tax-free (doesn't use RRSP contribution room) — preserves the tax-deductible benefit
- Withdraw with full tax on the withdrawal — typically the worst option
- Roll into the spouse's FHSA if eligible
Who qualifies as "first-time buyer" for FHSA
- Canadian resident, 18+ (some provinces require 19)
- You haven't owned a home you lived in during the current calendar year OR the four preceding years
- Your spouse / common-law partner also can't have owned a qualifying home in that window
Related
Mortgage agent or broker? Calculators like this one embed on the website you already have, and Mortgage360 campaign landing pages capture the enquiries they start straight into your CRM.