If you’re saving for your first home in Canada, two government programs offer significant tax advantages that can accelerate your down payment timeline dramatically: the First Home Savings Account (FHSA) and the RRSP Home Buyers’ Plan (HBP). Together, they can provide a combined tax deduction worth thousands of dollars annually while building your down payment. Here’s exactly how to maximize your First Home Savings Account alongside the HBP in 2026.
First Home Savings Account vs. RRSP HBP: Program Comparison at a Glance
| Feature | FHSA | RRSP HBP |
|---|---|---|
| Annual contribution limit | $8,000 | Based on existing RRSP balance |
| Lifetime limit | $40,000 | $35,000 withdrawal per person |
| Contribution tax deductible? | Yes — deducted from income | Yes — when originally contributed |
| Withdrawal tax-free? | Yes — for qualifying home purchase | Yes — but must repay over 15 years |
| Investment growth taxed? | No — tax-free growth | Tax-deferred (taxed at repayment) |
| Unused funds | Transfer to RRSP if home not purchased | Remains in RRSP for retirement |
| Carry-forward | Yes — up to $8,000 from prior year | No carryforward on HBP withdrawal |
The First Home Savings Account: The Most Powerful New Tax Account in Decades
The First Home Savings Account, introduced in 2023, is a genuinely exceptional tax vehicle — combining the deductibility of an RRSP with the tax-free withdrawal of a TFSA, specifically for first home purchases. Key rules in 2026:
- Open an account and contribute $8,000 before December 31 — even if you only deposit $1, the full $8,000 room is preserved for the year.
- Unused annual room carries forward by one year only — maximum $16,000 contribution in a single year (current + prior year carryforward).
- It must have been open at least one calendar year before you can use it for a qualifying purchase.
- If you never buy a home, FHSA funds transfer to your RRSP without using contribution room — making it an excellent retirement savings account regardless.
You can review the full official rules on the CRA’s First Home Savings Account page.
Combined Power: Using Your First Home Savings Account and RRSP HBP Together in 2026
A couple, each with full FHSA and RRSP HBP eligibility, can combine:
| Program | Per Person | Couple Total |
|---|---|---|
| FHSA (lifetime max) | $40,000 | $80,000 |
| RRSP HBP (withdrawal max) | $35,000 | $70,000 |
| Combined Maximum | $75,000 | $150,000 |
First Home Savings Account Tax Savings: How Much Does $8,000 Actually Save?
| Income | Marginal Tax Rate (ON) | Tax Refund on $8,000 FHSA |
|---|---|---|
| $60,000 | ~31.5% | ~$2,520 |
| $90,000 | ~43.4% | ~$3,472 |
| $120,000 | ~46.4% | ~$3,712 |
Once you know how much your First Home Savings Account contribution will save at tax time, it’s worth mapping that against a mortgage payment. Run the numbers on our mortgage payment calculator, or compare live lender rates on our best mortgage rates page.
Frequently Asked Questions
How much can I contribute to a First Home Savings Account per year?
You can contribute up to $8,000 per year to a First Home Savings Account, up to a lifetime limit of $40,000. Unused room carries forward by one year, so you can contribute up to $16,000 in a single year if you didn’t max out the prior year.
Can I use both a First Home Savings Account and the RRSP Home Buyers’ Plan?
Yes. You can use your First Home Savings Account and the RRSP Home Buyers’ Plan together for the same home purchase, combining up to $75,000 per person ($150,000 for a couple) in tax-advantaged down payment funds.
Ready to put your First Home Savings Account savings to work? See today’s first-time buyer mortgage rates at mrates.ca — updated daily for Ontario buyers.