FHSA vs HBP in 2026: which one to choose?

• Maximum contribution: $8,000 a year, $40,000 lifetime. • Unused room: you can carry up to $8,000 forward to the next year, so contribute at most $16,000 in a single year. • Room only starts when you open the account: an FHSA opened in 2026, even empty, gives you $8,000 of room for 2026 and lets you carry $8,000 into 2027. • Contributions are deductible federally and in Quebec (line 215 of the TP-1 return). • A qualifying withdrawal to buy a first home is tax-free and never repaid. • Duration: the account must be closed by the end of the 15th year after opening, the year you turn 71, or the year after your first qualifying withdrawal. Unused funds can be transferred to an RRSP without using RRSP room. No grace period: unlike the RRSP, an FHSA contribution counts for the calendar year in which it is made. To use your 2026 room, contribute by December 31, 2026.

• Maximum withdrawal from your RRSPs: $60,000 per person. • The withdrawal is not taxed, but it is a loan to yourself: it must be repaid to your RRSP over 15 years. • Each year you must repay at least 1/15 of the amount withdrawn; any shortfall is added to your taxable income for the year. • Extended relief: for a first withdrawal made between January 1, 2026 and December 31, 2028, repayment starts in the fifth year after the withdrawal instead of the second. A first withdrawal in 2026 means a first repayment in 2031. • RRSP contributions made in the 89 days before the withdrawal may not be deductible. • You must buy or build the home before October 1 of the year after the withdrawal. Example: $30,000 withdrawn under the HBP in 2026 is repaid at a minimum of $2,000 a year, from 2031 to 2045.

• Limit: FHSA $40,000 (plus growth); HBP $60,000. • Deduction: FHSA yes, when you contribute; HBP no (you got the deduction when you contributed to the RRSP). • Repayment: FHSA none; HBP mandatory over 15 years. • Effect on retirement: FHSA none; HBP, the money withdrawn stops growing in the RRSP until it is repaid. • If you don't buy: FHSA can be transferred to an RRSP without using room; HBP not applicable. • Contribution deadline: FHSA December 31; RRSP March 1, 2027 for the 2026 year (see our article on the 2027 RRSP deadline). As a rule, the FHSA is the better deal: it combines the RRSP's deduction with the TFSA's tax-free withdrawal, with no repayment.

Estimated tax saving (federal + Quebec, 2026 rates) for an $8,000 FHSA contribution: • $60,000 income: about $2,418 • $85,000 income: about $2,889 Over five years, $40,000 contributed by someone earning $85,000 represents about $14,450 of tax savings, not counting investment growth, which is also withdrawn tax-free. For a couple of first-time buyers, each spouse has their own limits: up to $80,000 in FHSAs and $120,000 under the HBP, or $200,000 in total for the same home if each has the savings. Run your projection with our FHSA calculator, then see what price that down payment makes possible with the mortgage affordability calculator.

Both plans target first-time buyers, with similar definitions: generally, you must not have lived in a home that you (or your spouse) owned during the current year or the previous four calendar years. To open an FHSA you must also be a resident of Canada and be at least 18 and no older than 71. Conditions are checked at the time of each withdrawal. You can make an HBP withdrawal and a qualifying FHSA withdrawal for the same home as long as you meet all the conditions of each.

1. Open an FHSA as early as possible, even with little money: opening the account is what starts your room. 2. Contribute to the FHSA first, ideally before December 31 each year. 3. If you already have a large RRSP, you can transfer up to $8,000 a year from your RRSP to your FHSA (no new deduction), or keep the RRSP for an HBP withdrawal. 4. Use the HBP as a top-up if the FHSA isn't enough, and plan for repayments starting in the fifth year. 5. Don't forget closing costs: the welcome tax, partly refunded to first-time buyers since 2026 (see our Montreal article), the notary and the inspection.