FHSA & RRSP Home Buyers' Plan: The Ottawa First-Time Buyer Strategy Guide for 2026

The First Home Savings Account (FHSA) — Canada's Best First-Home Tool

The FHSA was introduced in April 2023 and is now the strongest standalone tool for Ottawa first-time buyers. Here's why:

• Tax-deductible contributions — like an RRSP, reduces your taxable income
• Tax-free withdrawals — like a TFSA, no tax when you withdraw for your first home
• No repayment required — unlike the RRSP HBP, you never have to pay it back
• $8,000/year contribution limit
• $40,000 lifetime maximum
• Unused room carries forward up to $8,000 per year

The RRSP Home Buyers' Plan (HBP) — Up to $60,000 Per Person

The HBP lets you withdraw up to $60,000 from your RRSP tax-free for your first home purchase. Key rules:

• Maximum withdrawal: $60,000 per person ($120,000 for a couple)
• Funds must have been in the RRSP for at least 90 days before withdrawal
• Must be repaid to your RRSP over 15 years (starting 2 years after withdrawal)
• If you miss a repayment, the missed amount is added to your taxable income that year
• You must be a first-time buyer (haven't owned a home in the past 4 calendar years)

The HBP is essentially an interest-free loan from your future retirement savings. It's powerful but comes with a repayment obligation the FHSA doesn't have.

The Right Order to Use These Programs

This is where most Ottawa first-time buyers get it wrong. The correct order:

1. Open your FHSA first — start the contribution room clock immediately
2. Max your FHSA every year — $8,000/year, up to $40,000 lifetime. No repayment required.
3. Contribute to RRSP for HBP — once FHSA is maxed, build RRSP for HBP withdrawal
4. Withdraw FHSA first at purchase — always exhaust tax-free no-repayment FHSA before touching HBP
5. Use HBP to top up — use RRSP HBP for any additional down payment needed

The Couple Strategy — Up to $200,000 Tax-Advantaged

For a couple buying their first Ottawa home together, combining both programs creates a remarkable down payment opportunity:

• FHSA — Partner 1: $40,000 (tax-free, no repayment)
• FHSA — Partner 2: $40,000 (tax-free, no repayment)
• RRSP HBP — Partner 1: $60,000 (repay over 15 years)
• RRSP HBP — Partner 2: $60,000 (repay over 15 years)
• Combined: $200,000 in tax-advantaged down payment savings

On a $1,000,000 Ottawa home, this represents a 20% down payment — eliminating CMHC mortgage insurance entirely and saving tens of thousands in insurance premiums over the life of the mortgage.

Common Mistakes Ottawa First-Time Buyers Make

• Not opening the FHSA early enough. Every year you delay opening the account is $8,000 of contribution room permanently lost.
• Contributing to RRSP for HBP without the 90-day wait. Funds must sit in the RRSP for 90 days before HBP withdrawal or the deduction is disallowed.
• Using HBP before FHSA. Always maximize the no-repayment FHSA first.
• Forgetting about HBP repayments. Missing even one year's repayment adds that amount to your taxable income. Set up automatic RRSP contributions to handle repayments.
• Withdrawing from a locked-in RRSP. Group RRSPs and locked-in accounts cannot be used for HBP. Ensure your HBP funds are in a standard RRSP.