Buying your first home is an exciting milestone, but figuring out how to maximize your savings can feel overwhelming. As a local Burlington mortgage broker, I’m here to make it simple! Let’s break down two of the best tools available to first-time homebuyers: the First Home Savings Account (FHSA) and the Home Buyers’ Plan (HBP) for RRSPs—and how you can use them together to supercharge your home purchase.
First Home Savings Account (FHSA): A Game-Changer for First-Time Buyers
Introduced in April 2023, the FHSA combines the best features of RRSPs and TFSAs. Here’s how it works:
✅ Contribute up to $8,000 per year, with a lifetime cap of $40,000
✅ Your contributions are tax-deductible, reducing your taxable income
✅ The money grows tax-free
✅ Withdraw funds tax-free when buying your first home (including for closing costs!)
One of the best perks? Flexibility! Unlike RRSP withdrawals through the HBP, FHSA funds can cover both your down payment and closing costs. Just remember—you have 15 years to use the funds before they must be transferred to an RRSP.
The Home Buyers’ Plan (HBP): Borrowing from Your RRSP
The Home Buyers’ Plan (HBP) lets you withdraw up to $60,000 tax-free from your RRSP for your home purchase. This is essentially an interest-free loan from your future self, but there are a few key rules:
✔️ Funds can only be used for your down payment—not closing costs
✔️ You must repay the amount within 15 years (starting in year two)
✔️ If you don’t repay a portion each year, it gets added to your taxable income
How to Combine FHSA & HBP for Maximum Benefit
Let’s say you’re buying a $500,000 home. If you’ve maxed out both programs, you could access up to $100,000 between your FHSA ($40,000) and RRSP HBP ($60,000). Here’s how to use them smartly:
🟢 Use FHSA funds for closing costs (land transfer tax, legal fees, inspections, etc.)
🟢 Use RRSP withdrawals solely for your down payment
🟢 Plan withdrawals strategically—RRSP withdrawals must happen at least 30 days before closing, while FHSA funds offer more flexibility
Plan Ahead & Get Expert Guidance
Coordinating these programs requires good timing and planning, but that’s where I come in! As a Burlington mortgage broker, I help first-time buyers like you navigate these options to maximize savings, avoid tax pitfalls, and make homeownership as smooth as possible.
Thinking about your first home purchase? Let’s chat! I’d love to help you create a plan that gets you into your dream home—stress-free.
FAQs
❓ Can I use both FHSA and HBP for the same home purchase?
✅ Yes! Using both together can give you access to more funds.
❓ What happens if I don’t use all my FHSA funds?
✅ You can transfer any unused FHSA funds to your RRSP without affecting your contribution room.
❓ Do I need to withdraw the full RRSP HBP amount?
✅ Nope! You can withdraw any amount up to $60,000.
Want to chat about your options? Reach out anytime—I’m happy to help you build a solid plan for your first home!
