FHSA vs Home Buyers' Plan: Which Is Better for Your First Home?
Two powerful tools for first-time buyers. Here's how to choose - or use both.
Canada gives first-time homebuyers two great options: the FHSA (First Home Savings Account) and the HBP (Home Buyers' Plan). Both help you save for a down payment with tax advantages. But they work differently - and the best choice depends on your situation.
Quick Comparison
| Feature | FHSA | HBP (RRSP) |
|---|---|---|
| Maximum Amount | $40,000 | $60,000 |
| Tax Deduction | ||
| Tax-Free Withdrawal | ||
| Repayment Required | No | Yes (15 years) |
| Annual Limit | $8,000 | 18% of income |
| Years to Max | 5 years | Varies |
The Big Difference: Repayment
This is the key distinction. FHSA withdrawals are truly free - no repayment ever. HBP withdrawals must be repaid to your RRSP over 15 years, or the unpaid portion becomes taxable income.
FHSA: $40,000 Withdrawn
Repayment required: $0
Money is yours, no strings attached.
HBP: $60,000 Withdrawn
Repayment required: $4,000/year for 15 years
Miss a payment? That year's portion becomes taxable income.
When to Use FHSA
- You're 1-15 years away from buying
- You don't want repayment obligations after buying
- You're starting fresh (limited RRSP savings)
- You want the double tax benefit
When to Use HBP
- You already have substantial RRSP savings
- You need more than $40,000
- You're comfortable with the 15-year repayment
- You're buying soon and haven't built FHSA room
Best Strategy: Use Both
The maximum down payment assistance you can get:
- FHSA: $40,000 (no repayment)
- HBP: $60,000 (15-year repayment)
- Individual Total: $100,000
- Couple Total: $200,000
For a couple, that's potentially $200,000 for your down payment. Use FHSA first (free money), then HBP if you need more.
The Bottom Line
FHSA is the clear winner for most people - no repayment makes it superior. But HBP is valuable if you already have RRSP savings or need more than $40,000. Ideally, use both.
Related Guides:
Track Your Home Savings
Waypoint Budget helps you track FHSA and down payment progress all in one place.