FHSA vs Home Buyers' Plan: Which Should You Use?

I wrote about these two accounts last year, and a few things have shifted since then, so here is an updated walk through for anyone starting to plan a first purchase in North Vancouver or anywhere in the Lower Mainland. If you want the bigger picture first, my first-time home buyer page covers the whole process from pre-approval to keys.

The First Home Savings Account (FHSA) is a registered account that lets first-time buyers save for a home with a tax deduction going in and tax-free money coming out. You can contribute $8,000 a year, up to $40,000 in your lifetime. Contributions are generally deductible, like an RRSP, and when you take the money out to buy a qualifying first home, that withdrawal is tax-free, like a TFSA. You never pay it back.

Your contribution room only starts once you open the account. If you put in less than $8,000 in a year, you can carry forward up to $8,000 of unused room to the next year. That is why even a small first deposit can be worth it: opening the account starts the clock on your room.

There are limits on how long it can stay open. The account has to close by the end of the year after your first qualifying withdrawal, the 15th anniversary of opening it, or the year you turn 71, whichever comes first. If you never buy, you can move the money straight into your RRSP or RRIF without tax, and that transfer does not use up your RRSP room.

The Home Buyers' Plan (HBP) lets you borrow up to $60,000 from your own RRSP to buy or build a first home, then pay it back over 15 years. The withdrawal is not taxed as long as you follow the plan's rules, but it is a loan to yourself, not a gift.

Repayments normally start in the second year after the year you withdraw. Right now there is temporary relief: the Canada Revenue Agency says first withdrawals made from 2022 through the end of 2028 do not need to be repaid until the fifth year after the withdrawal. If you skip a required repayment, that amount is added to your taxable income for the year.

One timing detail catches people. RRSP contributions made in the 89 days before an HBP withdrawal may not be deductible, so a last minute top up right before you buy can cost you the tax break.

For most first-time buyers, the FHSA is the better place to start because the money never has to be paid back. Both programs give you a tax deduction on the way in, but only the FHSA lets you keep the money with no repayment schedule hanging over your first years of homeownership.

The HBP still has a place. If you already have a healthy RRSP, the HBP lets you put those savings to work on a down payment right away, and $60,000 is more than the FHSA's $40,000 lifetime limit. The trade off is the repayment: every year you owe the plan money is a year that cash is not going toward your mortgage, your strata fees or your emergency fund.

Yes. You can make a qualifying FHSA withdrawal and an HBP withdrawal for the same home, as long as you meet the conditions for each at the time you withdraw. For a couple who are both first-time buyers, each person can have their own FHSA and their own HBP withdrawal, so the maximum is $40,000 plus $60,000 each, or $200,000 combined, before any other savings.

That number only applies if both of you have filled your FHSAs and have $60,000 each in RRSPs. Most buyers use a mix of what they have, and that is perfectly fine.

For both programs, you generally count as a first-time buyer if you have not lived in a home that you or your spouse or common-law partner owned in the current year or the previous four calendar years. So someone who sold a condo five or more years ago may qualify again. The exact tests differ slightly between the FHSA and the HBP, so check the CRA pages linked below for your own case.

If you think you might buy in the next few years, the simplest step is to open an FHSA now, even with a small amount, so your contribution room starts building. Then look at your RRSP: if you already have savings there, the HBP can top up your down payment when the time comes. A mortgage specialist and an accountant can help you decide how much to put where, based on your income and tax bracket.

It also helps to understand what you will need in cash and when. A deposit is due within days of an accepted offer, well before the down payment, and I explain the difference in Deposit vs Down Payment in BC. If you are looking at a new build, my presale buying page covers how presale deposits and timelines work.

If you are starting to think about buying your first home and are not working with a REALTOR® yet, I would be happy to walk you through how the FHSA and the Home Buyers' Plan fit into a real purchase, from your first savings to closing day, in North Vancouver or anywhere in the Lower Mainland. You can get in touch here whenever you are ready, with no pressure at all.

Yes. The CRA allows a qualifying FHSA withdrawal and an HBP withdrawal for the same qualifying home, as long as you meet the conditions of each program at the time of each withdrawal.

No. A qualifying FHSA withdrawal is tax-free and never has to be repaid. Only the Home Buyers' Plan has a repayment schedule.

Normally in the second year after the year you withdraw, over up to 15 years. The CRA currently says first withdrawals made from 2022 through 2028 get a grace period, with repayments starting in the fifth year after the withdrawal.

You can transfer the money directly to your RRSP or RRIF without paying tax, and the transfer does not use your RRSP contribution room. If you simply withdraw it instead, it is taxed as income.

Often yes, but timing matters. Both programs tie withdrawals to deadlines around October 1st of the year after you withdraw, and presales can take years to complete, so talk to your lender and accountant about when to take the money out.

Mostly. You generally need to be a first-time buyer under the four-year rule, though there are exceptions, such as buying a home for or with a related person who has a disability.

This post is general information only. It is not legal, tax or financial advice. Rules can change, and these were last checked on Monday, November 9th, 2026. For advice on your own situation, please speak with a real estate lawyer or notary, and an accountant or financial advisor for the tax side. This post is also not intended to interfere with an existing client relationship. If you are already working with a REALTOR®, please reach out to them with your questions, since they know your file best.