FHSA or the Home Buyers' Plan: Which Should You Use First?
Canada has two federal programs aimed at first-home savers, and they are frequently described as alternatives. They are not — they work together, and for most people there is a clear order. The confusion costs savers real money, because one of them is far better than the other and it is not the older one.
The short answer
Fill the First Home Savings Account first. Contributions are deductible like an RRSP and qualifying withdrawals are tax-free like a TFSA, with nothing to repay. Use the Home Buyers’ Plan after that, or alongside it — it lets you withdraw from an RRSP, but you must pay it back over 15 years.
Key takeaways
- The FHSA allows $8,000 a year up to $40,000 lifetime, deductible going in and tax-free coming out for a qualifying home purchase.
- The Home Buyers’ Plan allows up to $60,000 from an RRSP, but it is a loan from yourself, repayable over 15 years.
- You can use both for the same purchase. Most people should.
- RRSP contributions must sit for 89 days before withdrawal under the HBP — a deadline that catches people who fund an RRSP the month they buy.
- Open an FHSA even if you cannot fund it yet: opening it starts your contribution room.
Who this guide is for
First-time buyers in Canada saving a down payment. These are federal programs with detailed eligibility rules — this is an orientation, and the Canada Revenue Agency pages linked at the end are the authority on your situation.
Why the FHSA usually comes first
It is the only registered account that is deductible on the way in and tax-free on the way out. An RRSP gives you the deduction but taxes the withdrawal unless you use the HBP, in which case you must repay it. A TFSA gives you the tax-free withdrawal but no deduction.
The FHSA gives you both, and there is nothing to repay. For a first-home saver it is strictly better than either — which is why it is the first account to fill.
Open an FHSA now even if you have nothing to put in it. Contribution room only begins once the account exists, so an unopened account is room you are quietly losing every year.
What the Home Buyers’ Plan is good for
The HBP comes into its own when you already have RRSP savings — particularly from employer matching — and want to use them for a home without triggering tax.
Understand what it is: a loan from your future self. Repayments begin after a grace period, and any year you miss a repayment, that amount is added to your taxable income. It is a genuine obligation, not a technicality.
Using both together
There is no rule against it, and for a buyer with several years to prepare, the combination is usually the strongest position: fill the FHSA to the annual limit each year, keep contributing to an RRSP where you have room or matching, then draw on both at purchase.
Two mechanics matter. RRSP money must sit 89 days before an HBP withdrawal. And the FHSA has its own qualifying conditions for a tax-free withdrawal — confirm you meet them before you rely on the money.
Where the TFSA fits
Behind both for this purpose, but not useless. A TFSA has no deduction, but it is completely flexible — no repayment, no qualifying-home test, no deadline. That makes it the right home for the part of your savings that might not end up in a house, and for closing costs, which the FHSA and HBP are not designed around.
A reasonable order for most people
- Open an FHSA today, funded or not, to start the contribution room.
- Capture any employer RRSP match — it is an immediate return nothing else matches.
- Fill the FHSA to $8,000 a year.
- Then the RRSP, with the HBP in mind and the 89 days rule respected.
- Use a TFSA for closing costs and for savings that may not become a house.
Personal circumstances change this — income level, employer plans, timing. Worth an hour with a professional before you commit a large sum.
Ryan McCann
Ryan is an Edmonton-based REALTOR® with MaxWell Polaris and the person behind Padster. He's helped over 2,200 clients in the Edmonton area buy and sell their home.
Contact Ryan today at 780-964-8445 to talk through your next step.
Last reviewed 12 August 2026. General information for Edmonton-area buyers — not individualized financial, mortgage, legal or tax advice. Mortgage rules, government programs and market figures change; confirm current details with a licensed mortgage professional, an Alberta real-estate lawyer, or the relevant government source before making a decision. Padster is not a brokerage.
Sources
- Canada Revenue Agency — First Home Savings Account (FHSA)
- Canada Revenue Agency — What is the Home Buyers’ Plan?
- Financial Consumer Agency of Canada — How much you need for a down payment
Your next step
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See Edmonton homes by monthly paymentFrequently asked questions
Can I use both the FHSA and the Home Buyers' Plan?
Yes. They can both be used toward the same qualifying home purchase, and for savers with time to prepare, using both is usually the strongest position.
How much can I put in an FHSA?
$8,000 per year up to a $40,000 lifetime limit, subject to the account being open and the CRA's eligibility rules. Contribution room starts when you open the account, not when you become eligible.
Do I have to repay an FHSA withdrawal?
No. A qualifying withdrawal for a first home is tax-free and there is nothing to repay. This is the main advantage over the Home Buyers' Plan, which must be repaid over 15 years.
What happens if I miss a Home Buyers' Plan repayment?
The amount you should have repaid that year is added to your taxable income for that year. It is not a penalty as such, but it is a real tax cost.
What is the 89-day rule?
RRSP contributions generally must remain in the account for at least 89 days before they can be withdrawn under the Home Buyers' Plan. Contributing an RRSP lump sum shortly before buying can therefore make that money unavailable to you.
What if I never buy a home?
FHSA rules provide for transferring funds to an RRSP or RRIF in defined circumstances, rather than losing them. The specifics matter — check the CRA guidance for your situation before assuming either outcome.
