The one-line version
FHSA if you're buying a first home (deduction going in, tax-free coming out — the best of both). RRSP when your tax rate is higher now than in retirement, or to grab an employer match. TFSA when your rate is lower or similar, when you want flexibility, or to protect income-tested benefits like OAS later. Most people use a mix.
2026 contribution limits
| Account | 2026 limit | Tax going in | Tax coming out |
|---|---|---|---|
| RRSP | 18% of prior-year earned income, up to $33,810 | Deductible (lowers taxable income) | Taxable as income |
| TFSA | $7,000 (plus unused room) | No deduction | Completely tax-free |
| FHSA | $8,000/yr, $40,000 lifetime | Deductible (like RRSP) | Tax-free for a qualifying first home |
The Home Buyers' Plan (HBP) — the RRSP's first-home feature
You don't have to choose between saving for a home and saving for retirement. The Home Buyers' Plan lets a first-time buyer withdraw up to $60,000 from an RRSP tax-free toward a home (up to $120,000 for a couple), then repay it over 15 years. Because the money moves through your RRSP, it's a powerful complement to — or, for some, a replacement for — the FHSA. Non-U.S. buyers can use the FHSA and the HBP together on the same purchase.
How to think about it
Employer match first. If your employer matches RRSP or pension contributions, contribute at least enough to capture the full match — it's an instant, guaranteed return no account can beat.
Then the FHSA, if a first home is in your plans. It's the only account that gives you a deduction and a tax-free withdrawal. If you never buy, the balance rolls into your RRSP (without using RRSP room).
Then RRSP vs TFSA on tax rates. Deduct in a high-tax year and withdraw in a low-tax year and the RRSP wins; if your rate won't drop — or you value flexibility and protecting OAS/GIS — the TFSA is often better. When they're close, the TFSA's flexibility usually breaks the tie.
The cross-border catch
If you're a U.S. citizen or green-card holder living in Canada, the TFSA and FHSA are not recognized by the IRS — their income can be U.S.-taxable and trigger onerous reporting. The RRSP is protected under the Canada–U.S. treaty. This flips the usual advice: a U.S. person should fully fund the RRSP before ever using an FHSA — ideally skip the FHSA entirely. For a first home, use the Home Buyers' Plan to draw from the RRSP: because it's funded through the treaty-protected RRSP, it creates no U.S. taxable income or extra reporting, whereas the FHSA creates both. Get cross-border guidance before funding a TFSA or FHSA.
Get the mix right for your situation
Especially if your life spans the border. A complimentary call with a dual-licensed advisor (CFP® in Canada & the U.S.) will map the order that fits you.
Book a complimentary call →Frequently asked questions
RRSP or TFSA first?
RRSP when your tax rate is higher now than in retirement (and always to capture an employer match); TFSA when your rate is lower or similar, you want flexibility, or you want to protect OAS/GIS. Many people use both.
What is the FHSA and who should use it?
The First Home Savings Account: deductible contributions like an RRSP, tax-free withdrawals for a first home like a TFSA. First-time buyers usually fill it first; unused funds roll to your RRSP.
What are the 2026 limits?
TFSA $7,000; RRSP 18% of earned income up to $33,810; FHSA $8,000/year ($40,000 lifetime).
What is the Home Buyers' Plan (HBP)?
It lets a first-time buyer withdraw up to $60,000 from an RRSP tax-free toward a home (up to $120,000 per couple), repaid over 15 years. You can combine it with an FHSA on the same purchase — and for U.S. persons it's the preferred first-home route because it avoids the FHSA's U.S. tax and reporting.
Are TFSAs and FHSAs good for U.S. citizens?
Often not — the IRS doesn't shelter them, creating U.S. tax and reporting. The RRSP is treaty-protected, so U.S. persons should fully fund the RRSP before an FHSA (ideally skip the FHSA) and use the Home Buyers' Plan for a first home. Get cross-border advice first.
Educational information only — not tax or financial advice. This tool gives a general priority based on common rules of thumb; the right answer depends on your full financial picture. 2026 limits per the CRA. Confirm with a qualified advisor before acting.