The First Home Savings Account (FHSA) and the Home Buyers Plan in your RRSP are great for stashing tax-sheltered savings for your homeownership goals, but that doesn’t mean they're the only two accounts you should use.
The Tax-Free Savings Account (TFSA) is also a good place to save for buying a home:
-
No worrying about paybacks. When you withdraw money from your RRSP to purchase your first home, you need to pay back that amount within 15 years, starting the second year after your purchase. And that can be really hard to do if you’re also raising children, saving for their education, and more.
-
Withdraw as much as you want. The maximum you can withdraw from your RRSP towards the down payment on your first home is $35,000. With your TFSA, you withdraw whatever you have saved already, giving you potentially much more to use on your downpayment.
- Fewer restrictions. Let’s say you and your partner are looking to purchase a home together. It’s your first time, but your partner already owns a condo in the city. Can you still use your Home Buyers Plan? The answer is no. But that doesn’t mean you can’t still use funds in your TFSA towards your downpayment.
Bottom line: Your RRSP and FHSA can help you achieve your homeownership dreams, but probably not by themselves. You should also consider using your TFSA.