RRSP and FHSA both give you a tax deduction on contributions. The difference: FHSA gives you a permanent tax-free withdrawal for your first home (no repayment), while RRSP's Home Buyers' Plan loans you $60K of your own money that must be repaid over 15 years. The optimal strategy uses BOTH — for up to $100K of tax-deferred down-payment funding.
| RRSP | FHSA | |
|---|---|---|
| Annual contribution limit | 18% of income · $32,490 (2025) cap | $8,000 |
| Lifetime limit | No fixed cap | $40,000 |
| Tax deduction | Yes | Yes |
| Tax-free withdrawal for first home | $60K via HBP · must repay 15 yrs | 100% tax-free · no repayment |
| Tax on retirement withdrawal | Fully taxable as income | N/A — closes after 15 yrs |
| Carries forward unused room | Yes — indefinitely | Only $8K from prior year |
| Age limit | Until December of age 71 | 18-71 first-time buyers only |
| What happens at 15 years | N/A | Transfer to RRSP tax-free, or pay tax |
Best if you have small RRSP contribution room (low income years, just started working) or you're unsure about buying. Withdrawal is permanent and tax-free with no repayment burden. Plus if you don't buy, FHSA transfers to RRSP at year 15 with no penalty.
Best if you're a high earner with substantial RRSP room. Stacking gets you to $100K. The $4K/yr HBP repayment is manageable on a high salary, and the tax refund from the RRSP contribution funds closing costs.
Best if you're past the FHSA-eligibility window (currently a homeowner who hasn't been classified as "first-time buyer" by HBP rules, age 71+), or if you have large RRSP room and aren't planning to buy. RRSP doesn't expire.