Mortgage Blog
Double-Barrel Down Payments: FHSA + New $60k HBP Withdrawal Rules Explained
July 9, 2025 | Posted by: Karen Monteiro
Scraping together a competitive down payment in 2025 often feels like a marathon. But two revamped federal programs-the First Home Savings Account (FHSA) and the beefed-up Home Buyers' Plan (HBP)-let first-time buyers tag-team their tax shelters, potentially unlocking six figures of cash without triggering a tax bill. Below, we break down the rules, the math, and the smart ways to combine them so you can hit the starting line of your home search with real momentum.
At-a-Glance: Key Limits & Timelines
- FHSA annual contribution room: $8,000; lifetime max: $40,000 (unused room carries forward).
- HBP withdrawal cap: $60,000 per buyer (up from $35,000).
- FHSA funds must be used within 15 years of opening the account; HBP withdrawals must be repaid to an RRSP over 15 years, starting the second calendar year after withdrawal.
- You can now use both programs for the same qualifying home purchase.
How the FHSA Works in 2025
Think of the FHSA as the love-child of an RRSP and a TFSA: contributions are tax-deductible now, and qualified withdrawals are tax-free later. You can deposit up to $8,000 per year until you hit the $40,000 lifetime ceiling, and any unused annual room rolls forward, so opening an account early maximizes flexibility (Source: CRA-First Home Savings Account, updated April 2025).
Contribution receipts lower your taxable income like an RRSP, and your growth compounds tax-free. You have a 15-year "participation period" to buy or build a qualifying first home. If you change your mind, you can roll the balance into an RRSP without affecting your RRSP contribution room, keeping the tax deferral intact.
The New $60k HBP: What Changed?
The 2024 federal budget boosted the RRSP withdrawal limit under the Home Buyers' Plan to $60,000, reflecting bigger down-payments in today's market (Source: Budget 2024, Chapter 1: More Affordable Homes). This change applies to withdrawals made on or after April 16, 2024 and extends to buyers with disabilities purchasing an accessible home.
You still need to repay the borrowed amount to your RRSP over 15 years or include any missed instalments in your taxable income. But the higher ceiling means a couple can now pull up to $120,000-and combine that with two FHSAs for a potential $200k+ down payment.
Double-Barrel Strategy: FHSA + HBP Together
Because Ottawa treats the FHSA and HBP as separate vehicles, you can tap both for the same purchase. A buyer who maxes their FHSA ($40k) and RRSP withdrawal ($60k) walks into their offer negotiations with $100,000-before even adding partner contributions or cash savings (Source: CRA-HBP Overview, updated January 2025).
That larger down payment can:
- Knock the home price below the 20 % mortgage-insurance threshold, saving thousands in CMHC premiums.
- Cut the mortgage balance, improving affordability stress-test ratios.
- Reduce long-term interest costs-especially valuable while BoC policy rates remain at 2.75 % (Source: Bank of Canada Rate Announcement, June 4 2025).
Timing Your Contributions & Withdrawals
- Open early: You unlock a fresh $8k FHSA room every January 1 after the account is opened, even if you contribute $0 the prior year.
- Front-load RRSPs: If cashflow is tight, contribute to your RRSP first, claim the tax refund, then re-invest the refund in the FHSA to double-dip on deductions.
- Coordinate closing date: FHSA withdrawals must occur before you take title; HBP withdrawals must be within 30 days of closing.
- Track repayment start: Missed HBP instalments are taxed, so set calendar reminders or automate contributions.
Why 2025 Buyers Are Leaning In
CMHC's 2025 Housing Market Outlook projects modest national price growth of 2–3 % through 2026, citing improved affordability as rates drift lower but inventory stays tight (Source: CMHC Housing Market Outlook, February 5 2025). Against that backdrop, first-timers with bigger liquid down payments will stand out to sellers and lenders alike.
Common Pitfalls to Avoid
- Overcontributing: FHSA overages incur a 1 % monthly penalty on the excess; use CRA MyAccount to check your room.
- Forgotten HBP instalments: Even $1 missed becomes taxable income for that year.
- Double-counting timelines: The 15-year FHSA clock and the 15-year HBP repayment schedule run independently-track them both.
- Market timing: Waiting for the "perfect" price can erase tax savings if rates rise again-balance patience with opportunity.
Top 5 Buyer Questions in 2025
1. Can I open an FHSA if I already own an investment property?
No. You must not have lived in a home you or your spouse owned in the current or previous four calendar years to qualify (Source: CRA FHSA eligibility).
2. Do FHSA contributions affect my RRSP room?
Good news-they don't. FHSA deposits sit on top of your RRSP and TFSA limits, giving you fresh tax-deductible space.
3. When do HBP repayments start under the new $60k limit?
The schedule hasn't changed: the second calendar year after the year you withdraw. If you take funds in 2025, repayments begin in 2027.
4. Can I combine an FHSA withdrawal, an HBP withdrawal, and a gift from parents?
Absolutely. Lenders will simply verify each source. A larger equity stake can even help you qualify under the mortgage stress test.
5. What happens if I don't buy within 15 years of opening my FHSA?
You must close the FHSA by the end of that year-rolling the balance into an RRSP or withdrawing it as taxable income. Rolling keeps the tax shelter intact.
Leveraging the FHSA and the enhanced HBP is one of the fastest ways to turn "someday" into "sold." If you're ready to map out a contribution strategy, or need help proving the down-payment source to a lender, our team is a click away.