First-Time Home Buyer in Canada: FHSA, 30-Year Mortgages and Rent vs Buy

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A first-time home buyer in Canada has three federal tools: the FHSA, the Home Buyers’ Plan and a 30-year amortization. They solve different problems.

The first two help you build a down payment. The third lowers your monthly payment but raises your total cost. Here is how they compare, and when renting still makes sense.

Quick answer: Start with an FHSA: you can put in $8,000 a year up to $40,000, deduct it from your income and withdraw it tax-free for a first home, with nothing to repay. Add the Home Buyers’ Plan if you have RRSP savings: you can borrow up to $60,000 from your RRSP, but you must repay it over 15 years. A 30-year amortization is open to first-time buyers and new-build buyers with less than 20% down; on a $400,000 mortgage at 4.39% it cuts the payment by about $198 a month but adds about $60,000 in interest.

Updated on September 23, 2026 · Sources: CRA — FHSA, CRA — Home Buyers’ Plan, FCAC — Amortization

Key takeaways

You can use the FHSA and the HBP for the same home, as long as you meet each program’s conditions.
First withdrawals under the HBP between 2026 and 2028 get extra time: repayment starts in the fifth year after, not the second.
A 30-year amortization applies only to insured mortgages (less than 20% down) for first-time buyers or new builds.
A longer amortization means lower payments and more total interest, as FCAC warns.

FHSA vs Home Buyers’ Plan: side by side

Criterion	FHSA	Home Buyers’ Plan
Maximum	$8,000/year, $40,000 lifetime	$60,000 from your RRSP
Tax on the way in	Deductible	Already deducted as RRSP
Tax on the way out	Tax-free for a home	Tax-free if repaid
Repayment	None	Over 15 years
If you don’t buy	Transfer to RRSP	Not applicable

30-year vs 25-year amortization

Criterion	30 years	25 years
Who can use it (insured)	First-time buyers, new builds	Everyone
Monthly payment*	About $1,991	About $2,190
Total interest*	About $316,900	About $256,800

*Our calculation: $400,000 mortgage at 4.39%, the insured 5-year fixed nesto lists as of September 2026, compounded semi-annually, assuming the rate never changes. Real renewals will differ.

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Down payment power: the HBP wins on size

Under the Home Buyers’ Plan rules in the Income Tax Act, you can withdraw up to $60,000 from your RRSPs, and your RRSP issuer withholds no tax on that amount. The FHSA tops out at a $40,000 lifetime limit. A couple buying together can each use both, so the total can be large.

If you have no RRSP yet, our RRSP limits and deadline guide explains how contributions work.

Tax: the FHSA wins

FHSA contributions are generally deductible, and a qualifying withdrawal is tax-free, with nothing to pay back. Your participation room starts at $8,000 in the year you open the account, and up to $8,000 of unused room carries forward. The HBP is a loan to yourself. Miss a repayment and that year’s amount is added to your income.

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For the full mechanics, read FHSA explained.

Flexibility: the FHSA wins again

If you don’t buy, you can transfer the FHSA directly to your RRSP without immediate tax and generally without using RRSP room. The account must close by the end of the year of its 15th anniversary, the year you turn 71, or the year after your first qualifying withdrawal, whichever comes first.

The HBP is more forgiving than it used to be. For a first withdrawal in 2026, the first repayment year is 2031.

Monthly payment: 30-year amortization wins, at a price

Since December 15, 2024, 30-year amortizations are available to all first-time buyers and all buyers of new builds with insured mortgages. The same reform raised the insured-mortgage price cap from $1 million to $1.5 million.

In our example, 30 years saves about $198 a month but costs about $60,000 more in interest. FCAC says a longer amortization “may add thousands or tens of thousands of dollars”. With 20% or more down, your lender sets the maximum amortization.

Current rates are in our mortgage rates comparison.

Rent vs buy: what to compare

There is no national answer. Compare your rent with the full cost of owning: mortgage payment, property tax, insurance, maintenance and condo fees. With less than 20% down, you also pay mortgage loan insurance of 0.6% to 4.5% of the loan. The minimum down payment is 5% on the first $500,000 and 10% on the portion up to $1.5 million.

Renting can make sense if you may move within a few years or your down payment is still thin. Keep building it in an FHSA and a high-interest savings account meanwhile.

Where to open an FHSA

An FHSA can hold cash, GICs, ETFs and stocks. Two popular online options:

Wealthsimple: managed investing or self-directed trading in over 14,000 stocks and ETFs commission-free; cash can earn up to 2.25% interest; transfer-out fees reimbursed when you move at least $25,000.
Questrade: no commissions on stocks, ETFs and most options; fractional shares from $1; transfer fees rebated up to $150 per account.

Investing involves risk. If you plan to buy within a year or two, cash or GICs protect the down payment from a market drop.

Verdict by profile

Choose the FHSA first if you are starting from zero or buying in 2 or more years.
Add the HBP if you already have RRSP savings and can handle repayments from 2031.
Choose 30 years only if the 25-year payment doesn’t fit your budget, and plan to prepay later.
Keep renting if your down payment is under 5% or you may relocate soon.

Checklist

Confirm you meet the first-time buyer test (you did not live in a home you or your spouse owned this year or in the past four calendar years).
Open an FHSA now to start the $8,000 room clock.
Check both credit reports; see how to check your credit score for free.
Price the insurance premium and closing costs.
Get a rate hold before house hunting.

How we compared

Checked: CRA, FCAC and Finance Canada pages, plus Wealthsimple, Questrade and nesto, on September 23, 2026.
Order: no ranking; the Quick answer gives our suggested sequence.
Independence: no provider paid for placement; this site is not the government.

Not financial advice. Rates and terms checked on September 23, 2026 with each provider’s official page; confirm before applying.

FAQ

Can I use the FHSA and the Home Buyers’ Plan together?

Yes. The CRA allows both for the same qualifying home if you meet each program’s conditions at the time of each withdrawal.

Who qualifies for a 30-year mortgage in Canada?

Borrowers with an insured mortgage (less than 20% down) who are first-time buyers or buying a new build.

What happens to my FHSA if I never buy?

You can transfer it directly to your RRSP or RRIF without immediate tax, or withdraw it as taxable income.

How much do I need for a down payment?

At least 5% on the first $500,000 and 10% on the rest up to $1.5 million; 20% at $1.5 million or more.

For the full picture, see our hub Best Personal Loans in Canada 2026, our comparison of the best personal loans in Canada and our guide to loans for bad credit in Canada.

Sources

Ieveera SEO is an independent publisher, not a bank or financial advisor; content is for information only and may include paid affiliate links that never affect our rankings — always confirm current rates and terms with the provider. Rates shown in CAD; verify with the issuer. Investing involves risk, including loss of principal. Not investment advice. Past returns don’t guarantee future results.