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Buying your first home: Effective strategies with the FHSA and the HBP

  • Writer: jeanbaptiste2207
    jeanbaptiste2207
  • Aug 13
  • 3 min read

Updated: Aug 14


''A good personalized plan can make the difference between waiting 10 years for your home... or moving in in 3 or 4 years.''
''A good personalized plan can make the difference between waiting 10 years for your home... or moving in in 3 or 4 years.''

Buying your first home is a dream for many... but it's also a big challenge, especially with rising prices and grim interest rates. The good news? The government is giving us some really powerful tools to help us get there faster: the FHSA and the HBP. Today, we're going to see how they work, how to use them together, and even how to optimize everything with a little trick that can save you thousands of dollars.


1. FHSA: Your best ally


The FHSA (First Home Savings Account) is a new account that combines the benefits of both the TFSA and the RRSP. Here's what it means in plain language:


  • Your contributions are tax deductible (like an RRSP).

  • Your withdrawals to buy a home are 100% tax-free (like a TFSA).

  • You can contribute up to $8,000 per year , for a lifetime maximum of $40,000 .


💡 Concrete example: Marie earns $60,000 per year. She opens a FHSA and deposits $8,000 into it. Result? She will receive approximately $2,400 in tax refunds at the end of the year (depending on her tax rate). Plus, when she withdraws this money to buy her house, she won't pay any tax on it .


2. HBP: The classic tool that still works


The Home Buyers' Plan (HBP) allows you to withdraw up to $35,000 from your RRSP to buy your home... without paying tax on the withdrawal . However, you must repay this amount within 15 years, otherwise it will be added to your income and taxed.


💡 Concrete example: John has $30,000 in his RRSP. He uses $25,000 with the HBP to buy his house. He will have to put approximately $1,666 per year back into his RRSP to avoid paying taxes.


3. Use the FHSA and the HBP together


Here's the good news: you can combine the two! That means you could earn up to:


  • $40,000 with the FHSA

  • $35,000 with the HBP


👉 That makes a possible total of $75,000 (and if you're a couple, we're talking $150,000 for two! ).


4. The trick: transfer from RRSP to FHSA


This is where it gets interesting…and where few people know it.

If you already have money in an RRSP, you can transfer it directly into your FHSA , tax-free. Why do this? Because a FHSA withdrawal to buy a home doesn't need to be repaid , unlike the HBP.


💡 Concrete example: Sophie has $20,000 in her RRSP. If she uses the HBP, she will have to repay approximately $1,333 per year for 15 years . If she transfers this $20,000 into her FHSA, she will be able to withdraw it for her house without ever having to repay it . It's like going into “total freedom mode”.


5. The winning strategy


  1. Open a FHSA as soon as possible and start contributing each year.

  2. Maximize contributions to take full advantage of tax deductions.

  3. Use the HBP as a supplement if necessary to have a larger down payment.

  4. Transfer from RRSP to FHSA to avoid repayments and free up your budget after the purchase.


Conclusion


By using the FHSA and the HBP wisely, and by applying the RRSP → FHSA transfer strategy, you can not only accumulate a down payment faster, but also save a lot of tax and avoid repayments that weigh on your finances after the purchase. The important thing is to plan early, use the tools in the right order and maximize each advantage offered.


At your service


Don't hesitate to contact me! A good personalized plan can make the difference between waiting 10 years for your home... or moving in in 3 or 4 years.


📞 [514-835-7387]



 
 
 

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