Can I use my RRSP or FHSA for a down payment?
Yes to both, and they work differently. A Home Buyers' Plan withdrawal from an RRSP must be repaid over fifteen years; an FHSA withdrawal for a qualifying home is not repaid and not taxed.
The Home Buyers' Plan lets a first-time buyer withdraw from an RRSP without immediate tax, up to a limit, provided the funds were in the account for at least ninety days. Repayment starts a few years later and runs over fifteen years. Miss an annual repayment and that portion becomes taxable income for the year.
The two accounts differ on one mechanical point, which is repayment. An FHSA contribution is deductible like an RRSP contribution, and a qualifying withdrawal is not taxed and not repaid. An RRSP withdrawal under the Home Buyers' Plan has to go back. Whether that difference is worth anything to you depends on your contribution room, your marginal rate now against the rate you expect later, and what else you were going to use the room for. The two can be combined.
What trips people up is timing. Institutions take days to weeks to process a withdrawal and produce the paperwork, and the ninety day holding rule is absolute. Start before you are in an offer, not after.
Also asked as
- What is the Home Buyers' Plan?
- What is a first home savings account?
Next questions
How much do I need for a down payment?
The minimum is tiered: five percent on the first portion of the price, ten percent on the portion above it, and twenty percent once the price passes the insurable cap. The calculator gives you the exact figure for your price.
Canada-wide
Do I count as a first-time buyer for the land transfer tax rebate?
Only if you have never owned a home anywhere in the world, neither has your spouse while you were spouses, and you are a Canadian citizen or permanent resident. The spousal rule and the status rule each disqualify more people than they expect.
Ontario