Deciding between an RRSP and an FHSA depends largely on your timeline for buying a home and your current tax bracket. Since both offer tax deductions, the “winner” is usually determined by how you plan to use the money and how much you earn today.

1. The General Rule of Thumb

If you are a first-time homebuyer, the FHSA is almost always the better first choice.1

 

• Tax-Free In, Tax-Free Out: Like an RRSP, you get a tax deduction when you contribute.2 Like a TFSA, you pay zero tax when you withdraw for a home.
• No Repayment: Unlike the RRSP’s Home Buyers’ Plan (HBP), which is essentially a loan from yourself that you must pay back over 15 years, FHSA withdrawals never have to be paid back.3
• The “Safety Net”: If you don’t end up buying a home within 15 years, you can roll the FHSA balance into your RRSP without using up any RRSP contribution room.4 It effectively creates “bonus” retirement space.

2. Decision Matrix: Income & Goals

If your situation is…	Prioritize…	Why?
Buying a home in 1–5 years	FHSA	You maximize the tax-free growth and non-taxable withdrawal benefits early.
High Income ($110k+)	Both	Max out the FHSA first ($8k), then put the rest in your RRSP to drop into a lower tax bracket.
Low/Modest Income (<$60k)	TFSA first, then FHSA	Tax deductions are less valuable at lower incomes. A TFSA keeps your money flexible for emergencies.
Employer RRSP Matching	RRSP (to the match)	Never turn down “free money.” Get the full employer match first, then pivot to the FHSA.
Already have 20% down payment	RRSP	If your home goal is already met, focus on long-term retirement compounding in your RRSP.

3. Comparing the “Home Buying” Features

If you are planning to use both, it is important to understand how they interact:

• The Power Couple: You can use both the FHSA and the RRSP Home Buyers’ Plan (HBP) for the same home purchase.5
• Withdrawal Limits: * FHSA: No limit on how much you can withdraw (it can be the full $40k + all investment growth).

• RRSP (HBP): Capped at $60,000 (increased in 2024 from $35,000).6

• The Repayment Factor: The HBP requires you to start paying back your RRSP the 5th year after your withdrawal (for withdrawals made between 2022-2025).7 The FHSA has zero repayment requirements.

Strategy Tip: The “Refund Loop”

A smart planning move is to contribute to your FHSA early in the year. When you receive your tax refund from that contribution, put that refund into your RRSP (or vice-versa). This allows you to use the government’s own money to help fill your second savings bucket.

Would you like me to calculate your estimated tax savings for 2025 based on a specific contribution amount and your province of residence?