First-time buyers often treat the FHSA and the Home Buyers’ Plan as two versions of the same idea, but they run on separate rules, and the details that actually cost people money rarely show up in bank marketing. Here’s what matters if you’re planning to use either — or both.
Two different tools, not two versions of the same one
The First Home Savings Account (FHSA) lets you contribute up to $8,000 a year, to a $40,000 lifetime limit, and withdraw it — plus any growth — completely tax-free when you buy a qualifying first home. Contributions are deductible from your income the same way RRSP contributions are, but unlike the Home Buyers’ Plan (HBP), nothing you withdraw ever has to be repaid.
The HBP works differently: it lets you withdraw up to $60,000 from your own RRSP, tax-free at the time, but it is effectively a loan from yourself. You’re required to repay it into an RRSP over up to 15 years, and anything you don’t repay on schedule gets added to your taxable income for that year.
FHSA room doesn’t start accumulating until you open the account
This is the mistake that costs people the most money. Unlike a TFSA, where room has been building in the background since you turned 18, FHSA participation room only starts the calendar year you actually open the account — even if you were eligible years earlier. Someone who waits until they’re ready to buy to open an FHSA has permanently lost every year of room they could have carried forward. If a home purchase is even a few years out, opening the account now, with a small deposit, locks in that year’s room for later.
You can use both for the same home, but the eligibility tests aren’t identical
You’re allowed to make a qualifying FHSA withdrawal and an HBP withdrawal for the same purchase, provided you independently meet each program’s conditions at the time of that withdrawal. Both use a similar “first-time buyer” test, but it isn’t a lifetime rule — it’s a four-calendar-year look-back. Anyone who owned a home more than four years before the withdrawal, and hasn’t owned one since, can qualify again for both programs. Check your exact timeline against the official conditions rather than assuming you’re locked out.
The HBP grace period keeps getting extended — that isn’t forgiveness
Ottawa has repeatedly pushed back when HBP repayments have to start. Withdrawals made from 2022 through 2025 got a five-year grace period instead of the original two years, and that relief has now been extended again to first withdrawals made between January 1, 2026 and December 31, 2028 — meaning someone who withdraws in 2026 doesn’t have to start repaying until 2031, with 15 years to finish from there. The trap: this delays the clock, it doesn’t cancel the balance. Once repayment starts, CRA calculates a minimum annual instalment, and any shortfall is automatically added to that year’s income rather than quietly carried forward.
What happens to the FHSA after you close it
After a qualifying withdrawal, you generally have until the end of the following calendar year to close all your FHSAs. Unused contributions can move tax-free into an RRSP or RRIF without eating into your RRSP contribution room — but only if the transfer happens before the account closes. Money that’s neither withdrawn nor transferred in time can lose its tax-sheltered treatment, which is the detail buyers who assume the account “just expires safely” tend to miss.
