Buying a first home in Quebec is increasingly challenging. High property prices, strict mortgage rules, and limited cash flow make saving a down payment difficult for many first-time buyers.
The new First Home Savings Account (FHSA) can help. Used properly, it significantly reduces your Quebec tax bill and accelerates down payment savings.
This guide explains how the FHSA works, how it compares to RRSP and TFSA strategies, and how to integrate it into a realistic first home savings plan in Quebec. Our advice draws on 20+ years of client experience.
Understanding the FHSA: A Tool for First Home Buyers in Quebec in 2026
The First Home Savings Account (FHSA) combines key features of both an RRSP and a TFSA. Contributions are tax-deductible, and qualifying withdrawals for a first home purchase are tax-free.
As of 2026, annual contributions can reach $8,000, with a $40,000 lifetime maximum. Unused annual room (up to $8,000) carries forward. Each spouse can open an FHSA, potentially doubling the tax-efficient down payment strategy for a couple.
Used correctly, the FHSA can save thousands in combined federal and Quebec taxes. It also allows you to grow your down payment through investments like ETFs, mutual funds, or GICs, depending on your risk tolerance and timeline.
FHSA vs. RRSP for Your First Home Down Payment
Both FHSA and RRSP help save for a first home, but they function differently. RRSPs utilize the Home Buyers’ Plan (HBP), which as of 2024 allows you to borrow up to $60,000 per person from your RRSP (increased from the previous $35,000 limit), repayable over 15 years. For a couple, this means accessing up to $120,000 for a down payment.
An FHSA has no repayment requirement. Once funds are withdrawn for an eligible home purchase, they leave the plan permanently and are tax-free. Many Quebec professionals benefit from combining FHSA contributions with RRSP/HBP strategies, timed to their income and tax brackets.
A thorough paycheque-by-paycheque analysis determines whether to prioritize FHSA, RRSP, or TFSA contributions. This optimizes tax deductions and long-term financial flexibility.
FHSA vs. TFSA in Your First Home Down Payment Plan
A TFSA provides tax-free growth and withdrawals, but contributions are not deductible. An FHSA offers a key tax deduction upon contribution, which is particularly valuable for Quebec residents in middle to higher tax brackets.
For some first-time buyers, the ideal strategy prioritizes FHSA, then uses a TFSA as an additional or backup down payment fund. If your timeline is uncertain, a TFSA offers more flexibility. Unused FHSA balances after 15 years can transfer tax-free to your RRSP without impacting RRSP room.
The right mix depends on your income, expected purchase date, and comfort level with investing versus holding cash in safer, lower-yield vehicles.
| Feature / Account Type | FHSA (First Home Savings) | RRSP (HBP for First Home) |
| Tax deduction on deposit | Yes | Yes |
| Tax on withdrawal | No (if for qualifying first home) | No if under HBP rules, but must be repaid |
| Maximum per person | $8,000/year, $40,000 lifetime | $60,000 for HBP (existing RRSP balance only) |
| Repayment required | No | Yes, over 15 years |
| Long-term backup option | Transfer to RRSP tax-free if not used | Becomes taxable if HBP not respected |
The Impact of FHSA on Your Quebec Tax Bill
For Quebec residents, the FHSA tax deduction applies to both federal and provincial income tax, yielding substantial savings. Someone with a combined marginal tax rate of 37-45% could receive $2,960 back on an $8,000 contribution.
These tax refunds can be reinvested into your FHSA, TFSA, or high-interest savings, accelerating down payment growth. Coordinating this with strategic RRSP contributions and basic tax planning helps maximize your gross salary retention.
Integrating your FHSA plan with your overall Quebec tax strategy is crucial. Consider credits, deductions, and your expected income trajectory over the coming years.
Coordinating RRSP and FHSA for Your Quebec First Home
Many Quebec first-time buyers wonder whether to prioritize RRSP or FHSA. Often, the FHSA is the preferred choice, offering a deduction without requiring repayment for qualifying home withdrawals.
After maximizing your FHSA room, RRSP contributions can boost your down payment via the Home Buyers’ Plan. A well-timed RRSP contribution one to two years before purchase can also generate extra tax refunds for your savings.
A coordinated plan prevents overfunding one vehicle while neglecting another better suited to your home-buying horizon and retirement needs.
| Strategy | Best For | Typical Use in Plan |
| FHSA first | 3–10 year horizon, first-time buyers | Core down payment, tax deduction, no repayment |
| RRSP HBP add-on | Higher income, strong saving capacity | Extra room via HBP, more tax refunds |
| TFSA flexibility | Short horizon, risk-averse, uncertain timing | Emergency buffer + supplemental down payment |
FHSA Down Payment Strategy and Quebec Mortgage Qualification
Your down payment size directly impacts mortgage qualification in Quebec. Less than 20% down requires mortgage default insurance (CMHC or equivalent), increasing your monthly payment.
An FHSA helps reach key down payment thresholds faster (e.g., 5%, 10%, or 20%). A couple contributing $8,000 each annually to their FHSA could accumulate $40,000-$80,000 plus growth over several years, significantly impacting their affordability in Montreal or Quebec City.
Aligning FHSA contributions with realistic property prices, pre-approval limits, and interest-rate scenarios is essential. This prevents over- or under-saving relative to your target purchase date.
Integrating FHSA into Your Overall Financial Plan in Quebec
The FHSA is a powerful tool, but it requires integration into a complete financial plan. Young professionals, self-employed individuals, and newcomers to Quebec often manage student loans, consumer debt, and tight cash flow while saving for a first home.
A comprehensive plan assesses net income, essential expenses, debt repayment priorities, and savings capacity. This guides monthly commitments to FHSA, RRSP, TFSA, and emergency funds, safeguarding day-to-day finances.
Integrating the FHSA into your broader retirement, tax, and mortgage strategy ensures your first home purchase supports – rather than undermines – long-term financial security.
Real Cases: FHSA Strategies for Quebec First-Time Home Buyers
Case 1 – Young professional couple in Montreal
A couple in their early 30s, both salaried professionals, wanted to buy a condo in Montreal within 5 years. They had modest TFSA savings and no RRSP.
THE PLAN:
- Each opened an FHSA and contributed $500/month.
- Combined annual FHSA contributions ($12,000) generated $4,000+ in tax refunds.
- Refunds redirected into their TFSA for liquidity.
THE RESULT:
- After four years: Over $70,000 accumulated (FHSA + TFSA + interest).
- Enough for a 15% down payment and closing costs.
- Maintained an emergency fund.
Case 2 – Newcomer self‑employed in Quebec City
A self‑employed newcomer to Quebec had irregular income and credit still developing. Home ownership felt far away, but they wanted a concrete plan.
THE PLAN:
- Detailed cash‑flow and tax review.
- Conservative FHSA target: $300/month.
- Combined with systematic tax installment planning.
- Modest RRSP contributions in higher‑income years.
THE RESULT:
- Over six years: Roughly $40,000 in FHSA and $20,000 in RRSP (for HBP).
- Improved credit profile.
- Qualified for a mortgage with a solid down payment and comfortable payments.
FAQ
1. How does the FHSA help with saving for a first home in Quebec?
The FHSA allows tax-deductible contributions and tax-free investment growth. Withdrawals for a qualifying first home in Quebec are also tax-free, effectively boosting your down payment with tax savings.
2. Can I use both FHSA and RRSP Home Buyers’ Plan for my down payment?
Yes, you can. You can make tax-free withdrawals from your FHSA and also use up to $35,000 from your RRSP via the Home Buyers’ Plan. This can significantly increase your available down payment.
3. What happens to my FHSA if I don’t buy a home in Quebec?
If you do not purchase a qualifying first home within the allowed period (generally 15 years from opening), you can transfer the FHSA balance tax-free to your RRSP without consuming additional RRSP room.
4. How much should I contribute monthly to my FHSA for a down payment?
This depends on your income, current savings, target property price, and timeline. Many Quebec first-time buyers aim for a fixed monthly amount, aligned with their budget after a paycheque analysis.
5. Should I prioritize paying off debt or contributing to FHSA for my first home?
High-interest debt (e.g., credit cards) usually requires priority repayment. However, balanced strategies are common, allocating funds to both debt repayment and FHSA contributions.
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Disclaimer: This guide is for informational purposes only and does not constitute professional financial, investment, or tax advice. The information in this article is current as of 2026 and may change with updates to tax and mortgage laws. Tax laws in Quebec and federal regulations regarding FHSA and RRSP are subject to change. The strategies mentioned may not be suitable for everyone. Always consult with a qualified financial advisor to discuss your specific financial situation before making major decisions.
