FHSA, TFSA or RRSP First? The Love Child of RRSP and TFSA

18 min read · Published October 18, 2026

The short answer

FHSA, TFSA or RRSP first? For most first-time home buyers, the FHSA. Fidelity Investments Canada put it plainly in May 2025: "Most people will want to prioritize the FHSA, because it combines the best parts of an RRSP and a TFSA." If your employer matches group-RRSP contributions, put in enough to get the full match alongside your FHSA, not instead of it, and check that your plan allows HBP withdrawals (some group or locked-in RRSPs do not).

David Chilton, author of The Wealthy Barber, called the FHSA "the love child of RRSP and TFSA" when he spoke at a Dominion Lending Centres session in spring 2026, which Ramin attended. He has said much the same publicly: in his video "FHSAs—A True No-Brainer" (October 9, 2024), he said "It's like an RRSP marries a TFSA and they give birth to the perfect child." And in a separate video on his site dated September 16, 2024, he told a young saver that for "a person like you who really wants to buy a home, that should probably be your first priority with your savings dollars, is the First Home Savings Account." The reason is simple: a deduction going in, like an RRSP, and tax-free coming out for your home, like a TFSA.

So: FHSA first. Once it is maxed, the only real question is whether the TFSA or the RRSP comes next. Our answer to that is our own practical guidance, not a government rule: for money meant for the home, the TFSA usually comes next, because nothing has to be paid back. For retirement money at higher incomes, the RRSP often wins. It depends on your tax bracket now versus later, and this guide shows the mechanics and the situations that change the answer.

Now the part that is easy to miss. FHSA and RRSP contributions are both tax-deductible, so a dollar in either one earns you the same tax refund. The difference is on the way out. A qualifying FHSA withdrawal comes out tax-free and is never paid back. RRSP money taken out under the Home Buyers' Plan (HBP) also comes out tax-free, but you have to put it back into your RRSP over 15 years, and in any year you fall short, the shortfall is added to your income and taxed.

The TFSA sits in between: no refund going in, but the money comes out tax-free with nothing to pay back, and the room comes back the next January 1. You also do not have to pick just one. CRA lets you use an FHSA and the HBP on the same home.

Same refund, different exit: FHSA vs RRSP

Here are the two tax-deductible accounts side by side, as CRA sets them out for 2026:

Attribute	FHSA First Home Savings Account	RRSP + Home Buyers' Plan Registered Retirement Savings Plan
Tax deduction	Yes. Claim it the year you contribute, or save it for a later year	Yes, within your RRSP room. Unused contributions can also be claimed in a later year
Yearly room	$8,000, starting only in the year you open your first FHSA. Up to $8,000 of unused room carries into the next year, so $16,000 at most in one year	Your own RRSP deduction limit
Maximum	$40,000 of contributions over your lifetime	Up to $60,000 out under the HBP, per person
Taking it out for a home	Tax-free. A qualifying withdrawal is not included in your income	Tax-free under the HBP
Paying it back	Never	Over 15 years, back into your RRSP
Missing a repayment	Nothing to miss	That year's shortfall is added to your income and taxed
If you never buy	Move it directly into your RRSP or RRIF with no tax at the time and without using RRSP room	It stays in your RRSP for retirement

Where the TFSA fits

A TFSA contribution is not tax-deductible, so it earns no refund. What you get instead is freedom. CRA says any income you earn in a TFSA is "generally tax-free, even when you make a withdrawal", and there is no rule requiring you to put withdrawals back.

The 2026 TFSA limit is $7,000. Room builds up every year from the year you turn 18 while you live in Canada, even before you open an account (where the age of majority is 19 you open at 19, and the room from 18 carries over). Someone who has been 18 or older and resident every year since TFSAs began in 2009, and has never contributed, has $109,000 of room in 2026. That is our sum of CRA's yearly limits: 4 × $5,000 + 2 × $5,500 + $10,000 + 3 × $5,500 + 4 × $6,000 + $6,500 + 3 × $7,000.

Anything you withdraw is added back to your room on January 1 of the next calendar year, not the same year. That is a classic trap for buyers: take money out, then put it back in the same year without the room, and it is an over-contribution, taxed at 1% a month on the excess, with no cushion. Wait for January 1.

That makes the TFSA the natural place for home savings beyond the FHSA limits, or for money you might need for something else if the purchase slips.

Who counts as a first-time home buyer? There are three tests

This is where precision matters. The FHSA has one test for opening the account and a different one for taking money out, and the HBP has its own. All three count calendar years: the current year plus the four before it. Owning a home in the past does not rule you out forever, and renting from a landlord never counts against you (living in a home your spouse or partner owns can).

Example: to open an FHSA in 2026, the window is 2022, 2023, 2024, 2025 and 2026 (before opening). If you owned and lived in a home but moved out in 2021 or earlier, that home no longer counts against you, so you can open an FHSA in 2026 as long as the other conditions are met (no home a spouse or partner owned that you lived in during the window, Canadian residence, age). If you moved out during 2022, you can open one in 2027, and each later year you lived there pushes it back a year. A home you left in 2021 or earlier also no longer counts for an FHSA withdrawal or an HBP withdrawal in 2026.

→Opening an FHSA: you must be a resident of Canada, at least 18 (some providers require 19 where that is the age of majority) and no older than 71 on December 31 of the year you open it. At no time in the current calendar year or the previous four can you have lived, as your principal residence, in a home owned (alone or jointly) by you or by the person who is your spouse or common-law partner when you open the account. No spouse or partner at opening means that part is met.
→Taking money out of an FHSA (a qualifying withdrawal): you are tested again at each withdrawal, by a looser test. You must not have lived, as your principal residence, in a home you owned at any time in the current calendar year before the withdrawal (except the 30 days just before it) or the previous four calendar years. Your spouse's home does not matter for this test. Before you withdraw, you need a written agreement to buy or build a home in Canada, with the purchase or construction completed before October 1 of the year after the withdrawal (that date is the deadline to buy or build, not to sign). You must intend to live in it within one year after buying or building it, you cannot have bought it more than 30 days before withdrawing, you must stay a resident of Canada from the withdrawal until you buy, and you give Form RC725 to your FHSA provider.
→The Home Buyers' Plan: tested at each withdrawal, over the same window (the current year before the withdrawal, except the last 30 days, plus the previous four calendar years). You must not have lived, as your principal residence, in a home you owned, and your spouse or common-law partner at the time of the withdrawal must not have owned a home that you lived in during your relationship. CRA's example: for a withdrawal on July 31, 2026, the window runs from January 1, 2022 to June 30, 2026.
→HBP-only exceptions: the first-time buyer test does not apply if you, or a related person you are helping, qualify for the disability tax credit and the home is more accessible or better suited to that person's needs. It also does not apply after a marriage or common-law breakdown if you have been living separate and apart for at least 90 days, starting in the withdrawal year or the four years before (you generally must sell the old home by the end of the second year after the withdrawal, unless you are buying out your ex's share, and it does not help if you now live in a home a new partner owns). The FHSA has no equivalent exceptions.
→Already have an FHSA and no longer qualify? The FHSA's first-time buyer test is applied only when you open the account, so on our reading of the rules you can keep contributing and deducting until it has to close. A later home withdrawal is tax-free only if you pass the withdrawal test at that time. Otherwise the money can move directly to your RRSP or RRIF.

The only real question: TFSA or RRSP next?

FHSA first is hard to beat for anyone who qualifies (take any employer RRSP match alongside it): it is the only one of the three that gives you a refund going in and asks for nothing back. Once it is maxed, the question is where the next dollar goes. For money meant for the home, the TFSA usually; for retirement money at higher incomes, the RRSP often. It depends on your tax bracket now versus later, and these are the situations that push the answer one way or the other:

→You are not a first-time buyer. You cannot open an FHSA (if you already have one, see above), and the HBP is off the table unless one of its exceptions applies. For new savings it is simply TFSA versus RRSP.
→Your tax rate is high now. The RRSP refund grows with your income. In British Columbia in 2026, each $1,000 deducted saves $196.00 at $50,000 of taxable income, $282.00 at $85,000 and $382.90 at $130,000 (single filer, basic personal credit only). A big refund now makes the RRSP and HBP route worth a closer look.
→You expect a lower income later. An RRSP deduction saves tax at today's rate, and RRSP money you eventually take out (other than through the HBP) is taxed at the rate you have then. High now and lower later favours the RRSP; the reverse favours the TFSA.
→Your income is low now. The refund is small, and a deduction stops helping once your tax for the year reaches zero, so the TFSA's flexibility may matter more. Unused FHSA and RRSP deductions can both be carried forward and claimed in a later year, so you can still fill the FHSA now and claim the deduction once your income is higher.
→The HBP repayment would pinch. HBP money goes back at about 1/15 a year, on top of a new mortgage payment. If that yearly amount would strain your budget, the TFSA carries no repayment at all.
→You might not buy, or not soon. TFSA money can be used for anything and its room comes back. An unused FHSA can move to your RRSP. RRSP money taken out other than through the HBP is taxed.

A worked example, to the cent

One person in British Columbia with $85,000 of taxable income every year saves $12,000 a year for five years, starting in 2026, and buys at the end of 2030. The assumptions, so you can check every number: 2026 federal and BC tax rules each year, a single filer with only the basic personal credit, no investment growth (everything in today's dollars), $7,000 of unused TFSA room at the start and the $7,000 limit each later year, enough RRSP room, and every contribution made before the home withdrawal (RRSP contributions at least 90 days before it, because of the 89-day rule below). Refunds are counted, not reinvested.

The refund first. Tax on $85,000 is $16,065.01. Deducting $12,000 brings taxable income to $73,000 and the tax to $12,681.01, a refund of $3,384.00 a year ($16,065.01 − $12,681.01). Deducting $8,000 brings it to $77,000 and $13,809.01, a refund of $2,256.00 ($16,065.01 − $13,809.01). That is 28.2 cents per dollar either way, which is why FHSA and RRSP dollars earn identical refunds. Then the three routes:

→Route A, FHSA then RRSP: $8,000 to the FHSA and $4,000 to the RRSP each year. After five years the FHSA holds $40,000 (the lifetime limit) and the RRSP $20,000. Refunds: 5 × $3,384.00 = $16,920.00. Down payment: $40,000 + $20,000 = $60,000. HBP to repay: $20,000, at $1,333.33 a year for 14 years and $1,333.38 in the last ($20,000 − 14 × $1,333.33). Skip one year's repayment and that year's tax goes from $16,065.01 to $16,441.01, which is $376.00 more.
→Route B, RRSP only: $12,000 to the RRSP each year, $60,000 after five years. Refunds: the same 5 × $3,384.00 = $16,920.00. Down payment: $60,000, all of it through the HBP. HBP to repay: $60,000, at $4,000.00 a year for 15 years. Skip one year and the tax goes from $16,065.01 to $17,193.01, which is $1,128.00 more.
→Route C, FHSA then TFSA then RRSP: $8,000 to the FHSA and $4,000 to the TFSA each year (the TFSA room is always enough). After five years the FHSA holds $40,000 and the TFSA $20,000. Refunds: 5 × $2,256.00 = $11,280.00. Down payment: $40,000 + $20,000 = $60,000. Nothing to repay.
→When repayments start: this buyer's first HBP withdrawal is in 2030, so under the law as it stands the 15 repayment years run 2032 to 2046. A first withdrawal in 2026, 2027 or 2028 would start them in the fifth year after instead (2026 means 2031 to 2045).

Your province and income change every figure above. Run your own numbers in the FHSA, TFSA or RRSP calculator, which works the three routes the same way for your province and income.

What the example shows

All three routes put the same $60,000 toward the home. Routes A and B earn exactly the same refunds, $16,920.00, because FHSA and RRSP dollars are deducted the same way. The differences are that B leaves $60,000 to pay back instead of $20,000, and uses up $40,000 more of your RRSP contribution room, which HBP repayments do not give back. For a first-time buyer, putting money in the RRSP before the FHSA is full gains nothing and adds repayments. If your employer matches group-RRSP contributions, put in enough to get the full match alongside your FHSA, not instead of it, and check that your plan allows HBP withdrawals (some group or locked-in RRSPs do not).

Route A against route C is the real choice. A brings in $5,640.00 more in refunds now ($16,920.00 − $11,280.00), but that is mostly a tax deferral, not free money: the $20,000 you repay sits in your RRSP and is taxed when you take it out in retirement. A comes out ahead if your tax rate then is lower than the 28.2% you save now; C leaves nothing to pay back and nothing taxed later. A also means a minimum of $1,333.33 a year for 15 years (a few cents more in the last; you can repay faster) alongside a new mortgage, and missing a year costs tax.

A couple who both qualify can each do this: two FHSAs, two TFSAs and two HBP limits. If both earned $85,000 and both took route A, that is $120,000 toward one home and $33,840.00 of refunds (2 × $16,920.00). Each person's refund depends on their own income.

Using the FHSA and the HBP on the same home, and as a couple

CRA is explicit: you can withdraw from your RRSP under the HBP and make a qualifying FHSA withdrawal for the same home, as long as you meet all the conditions at the time of each withdrawal.

Each spouse or common-law partner who qualifies has their own FHSA, with their own $8,000 a year and $40,000 lifetime room, and their own HBP limit. CRA's own first-home guide describes a couple where the HBP allows each of them to withdraw up to $60,000 from their RRSPs. You can only take HBP money out of RRSPs where you are the annuitant, and some (locked-in and many group RRSPs) do not allow HBP withdrawals, so check with your plan. A partner's home history can affect your tests (see above).

When HBP repayments start depends on the year of your first HBP withdrawal. For a first withdrawal from January 1, 2026 to December 31, 2028, the 15 years start in the fifth year after the withdrawal year: CRA's example is a 2026 withdrawal with a first repayment year of 2031. That extension was passed in June 2026 (first withdrawals in 2022 to 2025 already had the same five-year start); under the law as it stands, a first withdrawal in 2029 or later goes back to repayments starting the second year after. If you have used the HBP before, your HBP balance must be zero at the start of the year you withdraw again.

Timing rules worth knowing before you buy

A handful of small rules catch people out, mostly in the last few months before a purchase:

→Open an FHSA early. Room only starts in the year you open your first FHSA, and nothing builds up before that, so simply opening one, even with nothing in it, starts the clock. It also starts the 15-year limit on how long the account can stay open.
→The 89-day rule. RRSP contributions made in the 89 days before an HBP withdrawal may not be deductible, to the extent your RRSP is worth less than those contributions after the withdrawal. In plain terms: leave new RRSP money in for at least 90 days.
→January and February count for the new year. Unlike RRSP contributions, FHSA contributions made in the first 60 days of a year cannot be claimed on the previous year's return.
→Moving RRSP money into an FHSA uses FHSA room, gives no deduction, and does not give you back any RRSP room.
→Do not over-contribute. Going over your FHSA room costs 1% a month on the excess.
→Contribute before you withdraw. FHSA contributions made after your first home withdrawal are not deductible.
→Deadlines: for both accounts, the written agreement to buy or build a home in Canada must exist before you withdraw. October 1 of the year after the withdrawal is the deadline to complete the purchase or construction, not to sign: under the HBP the home must be bought or built before October 1 of the year after your first withdrawal, and for the FHSA the agreement's completion date must be before October 1 of the year after the withdrawal.

If you don't buy

An FHSA does not stay open forever. It must close by December 31 of the year of the earliest of three events: the 15th anniversary of opening your first FHSA, the year you turn 71, or the year after your first qualifying withdrawal.

If you never buy, the balance can be transferred directly into your RRSP or RRIF with no tax at the time and without using any of your RRSP room (it must be a direct transfer, and you cannot have an excess FHSA amount). Take it out as cash instead and it is taxable income. Leave it past the deadline and its value is added to your income. RRSP money stays in your RRSP, and TFSA money stays in your TFSA.

How this connects to your mortgage

The accounts decide how much down payment you have. The mortgage decides how much home it buys, and the two need to line up on dates. A few practical points from the files we arrange:

→Pre-approval: tell us which accounts hold the down payment and roughly how much is in each. Lenders want to see where the money is, with a 90-day history on bank or investment statements, and FHSA, TFSA and RRSP statements all serve.
→Timing the withdrawals: a qualifying FHSA withdrawal and an HBP withdrawal both need a written agreement to buy or build a home in Canada signed before you withdraw, and neither can be made more than 30 days after you acquire the home. In practice the money comes out after your offer is accepted and before closing, so ask each institution how long it takes to release funds.
→Budget for the repayment: HBP repayments are a yearly amount on top of your mortgage payment, starting the second year after your first withdrawal (the fifth year for first withdrawals in 2026 to 2028). Plan for them now rather than when the first one is due.
→Check the tax side with an accountant. This guide explains how the accounts work under CRA's rules. It is not investment advice: we arrange mortgages, not investments.

FAQ

Should I put money in my FHSA or my RRSP first?+

If you qualify as a first-time home buyer, usually the FHSA. If your employer matches group-RRSP contributions, put in enough to get the full match alongside your FHSA, not instead of it, and check that your plan allows HBP withdrawals (some group or locked-in RRSPs do not). Both contributions are tax-deductible, so the refund per dollar is the same, but a qualifying FHSA withdrawal is tax-free and never repaid, while RRSP money taken out under the Home Buyers' Plan has to go back into your RRSP over 15 years.

Should my next dollar go to a TFSA or an RRSP?+

It depends on your tax rate now versus in retirement, and your budget. The RRSP gives a refund now, and more of one the higher your income, but RRSP money is taxed when it comes out in retirement, and money taken out under the Home Buyers' Plan must be repaid over 15 years. The TFSA gives no refund, but the money comes out tax-free with nothing to repay and the room comes back the next January 1.

Can I use my FHSA and the Home Buyers' Plan for the same home?+

Yes. CRA allows an HBP withdrawal and a qualifying FHSA withdrawal for the same qualifying home, as long as you meet all the conditions at the time of each withdrawal.

Do I have to pay back money I take out of my FHSA?+

No. A qualifying FHSA withdrawal is not included in your income and is never repaid. Only Home Buyers' Plan withdrawals from an RRSP have to be repaid.

When do Home Buyers' Plan repayments start if I withdraw in 2026?+

For a first HBP withdrawal from January 1, 2026 to December 31, 2028, the 15-year repayment period starts in the fifth year after the withdrawal year, so a 2026 withdrawal means your first repayment year is 2031. Under the law as it stands, a first withdrawal in 2029 or later starts repayments in the second year after. Any shortfall in a year is added to your income and taxed.

I owned a home years ago. Am I a first-time home buyer?+

You may be. The tests look at the current calendar year and the four before it. If you owned and lived in a home but moved out in 2021 or earlier, that home no longer counts against you for opening an FHSA in 2026, though the other conditions still apply (a home your spouse or partner owned that you lived in during the window, Canadian residence, age). If you moved out during 2022, you can open one in 2027, and each later year you lived there pushes it back a year. The FHSA withdrawal test and the HBP test are worded differently, so check each one.

What happens to my FHSA if I never buy a home?+

You can transfer it directly into your RRSP or RRIF with no tax at the time and without using RRSP room. The FHSA must close by December 31 of the year of the earliest of its 15th anniversary, the year you turn 71, or the year after your first qualifying withdrawal.

Can my spouse and I both use an FHSA and the Home Buyers' Plan?+

Yes, if each of you qualifies. Each person has their own FHSA room ($8,000 a year, $40,000 lifetime) and can withdraw up to $60,000 from their own RRSPs under the HBP, all toward the same home.

Sources

Every rule in this guide was checked against these Canada Revenue Agency and Department of Finance pages and the Income Tax Act, and the Fidelity and Wealthy Barber quotes against their own pages, on October 18, 2026. David Chilton's "love child" line is from a Dominion Lending Centres session in spring 2026 that Ramin attended; there is no public recording. His October 9, 2024 and September 16, 2024 quotes are from the two videos linked below. CRA's separate page on repaying the HBP still describes only the 2022 to 2025 relief; its main Home Buyers' Plan page and the Act show the 2026 to 2028 extension. Tax figures use 2026 federal and British Columbia rates and credits.

FHSA, TFSA or RRSP first? The FHSA is the love child of RRSP and TFSA