FHSA vs. Home Buyers' Plan for St. Albert Buyers

Published: July 21, 2026

The Quick Answer

Use the FHSA first in most cases: contributions are generally deductible, qualifying home withdrawals are tax-free, and you don't repay them. The Home Buyers' Plan can add up to $60,000 from an RRSP for the same purchase, but that money must normally be repaid over as many as 15 years.

— John Carle, St. Albert REALTOR®

A first-time buyer can use an FHSA and the Home Buyers' Plan on the same qualifying home. That doesn't mean both accounts should automatically be emptied.

The FHSA is new money earmarked for a first home. The Home Buyers' Plan, or HBP, borrows from retirement savings already inside an RRSP.

One gives you a tax deduction on the way in and a tax-free qualifying withdrawal on the way out. The other gives you temporary access to your RRSP, then asks you to rebuild it.

That's the decision in plain language.

Key Takeaways at a Glance

• An FHSA starts with $8,000 of participation room in the year the first account is opened.
• The FHSA has a $40,000 lifetime contribution limit.
• The HBP currently permits an eligible person to withdraw up to $60,000 from RRSPs.
• CRA says an eligible buyer may use an FHSA qualifying withdrawal and the HBP for the same qualifying home.
• FHSA qualifying withdrawals aren't repaid; HBP withdrawals generally are.
• Money needed for legal fees, inspection, moving and immediate repairs shouldn't all be pushed into the down payment.

"John Carle says:" — Keep the plan after possession

"The biggest down payment isn't always the best plan. If using every FHSA and RRSP dollar leaves you with nothing for closing, insurance, a furnace call or a condo assessment, the purchase is too tight. Get the tax benefit, but keep enough cash to own the home after you get the keys."

— John Carle, St. Albert REALTOR® with 25+ years in the market

The FHSA: the cleaner first step

The Canada Revenue Agency's FHSA page describes the account as a registered plan that lets an eligible first-time buyer save for a qualifying first home tax-free, within the program limits.

Your participation room is $8,000 in the year you open your first FHSA. The lifetime contribution limit is $40,000.

The account combines two benefits buyers usually have to choose between:

• Contributions are generally deductible, similar to an RRSP contribution.
• A qualifying withdrawal to buy or build a first home is tax-free, similar to a TFSA withdrawal.

You don't have to repay a qualifying FHSA withdrawal.

That last point is why the FHSA usually goes first. A buyer gets the deduction without creating a future annual repayment.

Opening the account starts the clock on room

FHSA room doesn't begin just because you're old enough or intend to buy. It begins when the first FHSA is opened.

A buyer who opens an account and contributes less than $8,000 may carry forward unused participation room, subject to CRA's rules and limits. But don't guess at your available room from memory. Check the amount with CRA and the financial institution before contributing.

Overcontributions can create tax problems. Transfers from an RRSP into an FHSA also use FHSA participation room, and CRA says those transfers aren't deductible again.

The tax refund isn't instant equity

A contribution may reduce taxable income, but the refund comes after the tax return is assessed. If you're buying next month, don't include an expected refund in the cash-to-close calculation unless the money is already available.

A refund can be useful for rebuilding the emergency fund after possession. It shouldn't be treated like cash in the lawyer's trust account before it arrives.

The Home Buyers' Plan: useful, but it isn't free money

The CRA Home Buyers' Plan overview sets the current withdrawal limit at $60,000.

An eligible buyer can withdraw from RRSPs to buy or build a qualifying home. Couples who each qualify may each have access to their own limit, but each person must satisfy the program rules.

The withdrawal isn't included in income when the HBP conditions are met. The trade-off is repayment.

CRA's HBP repayment guidance says participants have up to 15 years to repay the amount to an RRSP, pooled registered pension plan or specified pension plan.

The temporary extra repayment deferral applied to first withdrawals made from 2022 through 2025. A buyer making a 2026 withdrawal shouldn't assume the old temporary relief continues. Confirm the first repayment year with CRA or a tax professional.

If the required annual amount isn't designated as a repayment, that amount may be included in taxable income. So the HBP turns part of the down payment into a future budget item.

A simple comparison

The table isn't tax advice. It shows the structural difference.

Example: one buyer with $55,000 available

Suppose a St. Albert buyer has:

• $25,000 in an FHSA
• $30,000 in an RRSP
• $12,000 in a regular savings account

The buyer could withdraw the FHSA and use the HBP for the RRSP. That would put $55,000 toward the purchase before touching the $12,000 cash account.

But putting all $55,000 into the down payment may be a mistake.

Legal work, title insurance, an inspection, moving, utility setup and property-tax adjustments still need cash. The house may need paint, locks or an appliance during the first month. A condo may carry move-in fees or require a personal insurance policy before possession.

A stronger plan could use enough registered money to satisfy the down-payment requirement, then preserve a proper closing and repair reserve. The exact amount depends on price, mortgage insurance, lender rules and the buyer's income.

Read Alberta closing costs before deciding how much cash is truly available.

Which account should get the next dollar?

For many eligible buyers, the order is:

1. Open and fund the FHSA, within verified participation room.
2. Keep cash for closing costs and a post-possession reserve.
3. Use the HBP only if RRSP money materially improves the purchase without damaging the retirement plan.

There are exceptions.

A buyer receiving an employer RRSP match shouldn't ignore the match. Someone in a low tax bracket today may decide to save some FHSA deduction for a later year, if CRA rules permit. A person close to retirement may be reluctant to remove invested RRSP money.

The home's timing matters too. Money needed within months shouldn't be exposed to the same investment risk as money that can stay invested for ten years. Account type doesn't remove market risk inside the account.

This is where a financial planner or tax professional earns their fee. A REALTOR® can help establish the likely purchase range and closing timeline, but shouldn't invent tax advice.

Don't let the account balance set the purchase price

Registered savings can make a down payment possible. They don't prove the monthly payment is comfortable.

Before shopping, test the full monthly number:

• mortgage principal and interest
• property tax
• heat, power, water and waste
• home insurance
• condo fees, if applicable
• maintenance and repair savings
• HBP repayment, when it begins

A lender may approve more than a buyer wants to live with. That's not a criticism of the lender. Approval measures lending risk. Your budget measures your life.

The St. Albert buyer guide covers the rest of the purchase process. If the search includes condominiums, review how condo fees affect the monthly cost.

Mistakes to avoid

Waiting to open an FHSA

You don't create FHSA room retroactively for years when no account existed. If you're eligible and expect to buy later, opening the account can matter even if the first contribution is modest.

Moving RRSP money without checking the rules

An RRSP-to-FHSA transfer uses FHSA room and doesn't create another deduction. HBP withdrawals also have forms, timing rules and eligibility conditions. Confirm before moving the money.

Counting the same dollar twice

The down-payment spreadsheet can't use an expected tax refund for closing and also use it as the emergency fund. One dollar gets one job.

Draining retirement because a lender approved it

The HBP is optional. A buyer who can complete the purchase with an FHSA and cash may prefer to leave the RRSP invested.

Forgetting the repayment line

A full $60,000 HBP withdrawal spread evenly over 15 years is roughly $4,000 per year before considering CRA's actual annual calculation. That's meaningful cash flow.

A practical sequence before writing an offer

Get the account work done before a house creates a deadline.

First, confirm FHSA and RRSP balances and room. Then ask the lender which funds need to be in which account, and for how long. Ask the lawyer what documents will be required to establish the source of funds.

Build three numbers:

• the maximum available down payment
• the down payment you want to use
• the cash that remains after closing

If the third number is close to zero, fix the plan before shopping.

Sources

• Canada Revenue Agency: First Home Savings Account, including the $8,000 first-year room and FHSA tax treatment, accessed July 21, 2026.
• Canada Revenue Agency: Home Buyers' Plan, including the current $60,000 withdrawal limit and combined FHSA/HBP use, accessed July 21, 2026.
• Canada Revenue Agency: HBP repayments, including the 15-year repayment framework, accessed July 21, 2026.

Bottom Line

The FHSA usually comes first because it offers a deduction and a tax-free qualifying withdrawal without repayment. The HBP can add substantially more down-payment money, but it borrows from retirement and adds future repayments.

Build the home budget before moving the money. John can help set a realistic St. Albert purchase range, then your lender and tax adviser can confirm how the accounts fit.

When you're ready to sort out the home side, Just Call John.

780-937-7534 john@johncarle.com