Home Buying and Mortgages
Using a FHSA, RRSP or TFSA for a down payment on a home
Considerations when you're saving for your down payment.
By ATB Financial 26 September 2025 5 min read
If you are interested in starting to save for your future down payment, you’ve probably wondered which savings plan or account will help you reach your goals most efficiently, while also allowing you to take advantage of the tax benefits and access your funds when you need them.
Types of savings plans
In 2023, the Government of Canada introduced the First Home Savings Account (FHSA), a registered plan that allows residents to save toward the down payment on their first home—tax free. Now that FHSAs are available, you may wonder whether an FHSA, Registered Retirement Savings Plan (RRSP) or Tax-Free Savings Account (TFSA) works for your down payment. Let’s take a look at how FHSAs compare with RRSPs and TFSAs, and how your goals and circumstances should inform your decision.
Things to consider when saving for your down payment
What you’re saving for: As the names of these plans imply, each one is designed for a different type of savings goal, but all can help you work towards saving for your first down payment. If you're putting together a down payment for your first home, an FHSA might be the ideal plan for you. While an RRSP is typically for retirement savings, it can also be a valuable tool for a down payment through the Home Buyer's Plan (HBP). Additionally, a TFSA offers a flexible option that can help complement your down payment savings.
Your cash flow: When saving for your down payment, prioritizing your spending is a crucial first step. Begin by creating a detailed monthly budget to identify where your extra cash flow can be best allocated. Consider what your future mortgage and property tax payments might look like, and then work to put a remaining piece of your monthly income towards your down payment. This strategic approach ensures your money is working effectively towards your home ownership goal.
Your eligibility: Find out which savings plans you are eligible to open, especially considering their specific uses for a down payment. While the FHSA and TFSA require you to be at least 18, the RRSP and FHSA also have an age cap at 71. Both the FHSA and the HBP specifically require you to be a "first-time" home buyer (someone who hasn't lived in a home they or their spouse owned within the past five calendar years).
How much you want to put away each year: Each of the three types of savings plan has a different annual contribution limit, and different rules about how total contribution room is calculated (based on factors like your income, your age, and the number of years since you opened your plan). For your individual contribution limits, it's always best to reference the Canada Revenue Agency (CRA).
Leveraging Government Programs: Understanding how government-sponsored savings plans can significantly impact your tax situation is crucial when saving for a down payment.
- First Home Savings Account (FHSA): This plan is explicitly designed for first-time homebuyers. Contributions to an FHSA are tax-deductible, while any interest earned and withdrawals made for a qualifying home purchase are entirely tax-free.
- Registered Retirement Savings Plan (RRSP): Contributions to an RRSP are tax-deductible, which can reduce your taxable income. Through the Home Buyer's Plan (HBP), you can withdraw up to $60,000 from your RRSP tax-free to put towards your down payment. However, it is critical to remember that under the HBP, you must recontribute the withdrawn amount back to your RRSP over a 15-year period to avoid the amount being added to your taxable income.
- Tax-Free Savings Account (TFSA): While TFSAs accept after-tax contributions, all interest earned and withdrawals are tax-free. This offers flexible growth for any financial goal, including topping up your down payment savings.
Pro Tip: If your personal circumstances allow you to receive a tax refund as a result of contributing to an FHSA or RRSP, it is highly recommended to re-contribute that refund back into another registered savings plan. This strategy can further compound your savings and accelerate your progress towards your down payment. It's important to note that this benefit is highly dependent on your individual tax situation and may not apply to everyone.
How long you’ll need to save for: The FHSA and RRSP both have limits on how long your savings plan can remain open. You can save in an FHSA for a maximum of 15 years or before you turn the age of 71 (whichever comes first), until the end of the year after you make your first qualifying withdrawal, or until you turn 71 (whichever comes first). Although, you can contribute to an RRSP until December 31 of the calendar year in which you turn 71, the HBP has a 15 year payback period. As a result, to avoid any unintended consequences, if you want to access proceeds through the HBP, you would likely want to do so at least 15 years before you turn 71.
Saving for your down payment - Plan Comparison Chart
| - | FHSA | TFSA | RRSP |
|---|---|---|---|
| Eligible participants | Residents of Canada who are between 18 and 71 years old and first-time home buyers | Residents of Canada who are at least 18 years old and have a valid social insurance number (SIN). | Residents of Canada who are between 18 and 71 years old, have a valid social insurance number (SIN), have earned income, and have filed a tax return in Canada. |
| Plan type | Individual | Individual | Individual or Spousal |
| Contribution limits | $8,000 per calendar year up to a lifetime maximum of $40,0001. | $7,000 for 2025 calendar year + any unused contributions from previous year2. | Your maximum contribution limit, which is based on your income and an RRSP limit defined by the CRA for each calendar year3. |
| Tax benefits | Contributions are tax deductible. Interest-earned and withdrawals used towards a qualifying first home purchase are tax free. | Contributions are not tax deductible, but interest earned by funds in your TFSA is tax free, and you do not have to pay any income tax on withdrawals. | Contributions are tax deductible in the year you make them. Over the long term, tax is deferred until you start to withdraw funds from your RRSP, at which time you must pay income tax on your withdrawals unless you are withdrawing through the Home Buyers’ Plan (HBP) or Lifelong Learning Plan (LLP). |
| Account life | An FHSA can stay open for 15 years, until the end of the year after you make your first withdrawal, or until you turn 71 (whichever comes first). | No limits on account life | December 31 of the year you turn 71 is the last day to contribute to the plan. By that date, the account must be converted to a registered retirement income fund (RRIF), an annuity or withdrawn as fully taxable cash. |
Video: How much do I need for a down payment in Alberta?
If you have more questions about how these registered plans can help you save for your down payment, or want personalized advice on home buying and mortgages, you can book an appointment with an ATB expert today who can offer tailored advice to support you in making the best decisions for your home ownership journey.
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