Key Takeaways
- 1.Stacking the FHSA ($40,000) and HBP ($60,000) gives a first-time buyer up to $100,000 in registered savings for a down payment — both programs can be used for the same qualifying purchase.
- 2.The FHSA is strictly superior to the HBP: contributions are tax-deductible and withdrawals are permanently tax-free with no repayment. The HBP requires repayment over 15 years or the amount is added to taxable income.
- 3.At $95,000 income in Alberta, the combined marginal tax rate is 30.5% (20.5% federal + 10% provincial). FHSA contributions of $40,000 generate a $12,200 tax refund.
- 4.Alberta charges no land transfer tax. On a $575,000 home, this saves $8,475 versus Ontario and $10,000 versus BC — effectively adding thousands to your purchasing power.
- 5.With $100,000 down (17.4%), CMHC insurance adds $13,300 to the mortgage. You would need $115,000 (20%) to avoid it entirely — $15,000 more than the combined FHSA + HBP maximum.
The Scenario: First-Time Buyer in Edmonton, $95K Income, $575K Home
This worked example models a common situation for Alberta first-time buyers: someone who has been maximizing their FHSA for five years and has built up RRSP savings, now ready to purchase. We calculate every dollar from contribution to closing.
- Buyer gross income: $95,000
- Province: Alberta
- Home purchase price: $575,000 (Edmonton)
- FHSA balance: $40,000 (lifetime max)
- RRSP balance available for HBP: $60,000+
- Combined down payment: $100,000 (FHSA $40K + HBP $60K)
- First-time home buyer: Yes (qualifying for both programs)
Step 1: FHSA Contribution Tax Refund at $95K Alberta Income
The First Home Savings Account allows annual contributions of up to $8,000, with a $40,000 lifetime cap. Every dollar contributed is tax-deductible — identical to an RRSP deduction. But unlike the RRSP, qualifying withdrawals from the FHSA are completely tax-free with no repayment obligation. This asymmetry makes the FHSA the single most powerful registered account for first-time buyers.
At $95,000 gross income in Alberta, the marginal tax rate breaks down as follows:
2025 Marginal Tax Rate at $95,000 (Alberta):
Federal: 20.5% (income between $57,375 and $114,750)
Alberta: 10.0% (income up to $148,269)
Combined marginal rate: 30.5%
Tax refund on $40,000 FHSA contributions:
$40,000 × 30.5% = $12,200
That $12,200 refund is money the buyer keeps permanently. It is not clawed back when the FHSA is withdrawn for the home purchase. Compare this to a non-registered savings account where the same $40,000 would have been saved from after-tax dollars and earned taxable interest along the way.
FHSA Tax Refund by Income Band in Alberta
The value of the FHSA deduction varies significantly depending on your income. Here is the refund on a full $40,000 of contributions at different Alberta income levels:
| Gross Income | Federal Rate | Alberta Rate | Combined Rate | Refund on $40K |
|---|---|---|---|---|
| $55,000 | 15.0% | 10.0% | 25.0% | $10,000 |
| $95,000 | 20.5% | 10.0% | 30.5% | $12,200 |
| $115,000 | 20.5% | 10.0% | 30.5% | $12,200 |
| $150,000 | 26.0% | 12.0% | 38.0% | $15,200 |
| $200,000 | 29.0% | 13.0% | 42.0% | $16,800 |
Higher-income earners get a larger refund per dollar of FHSA contribution. If you expect a raise soon, you can contribute now but defer claiming the deduction to a higher-income year — a flexibility the RRSP does not offer as cleanly. For a deeper comparison of RRSP vs TFSA at higher Alberta incomes, see our RRSP vs TFSA for a $180K Alberta earner.
Step 2: RRSP Home Buyers' Plan — $60,000 Withdrawal and 15-Year Repayment
The Home Buyers' Plan allows first-time buyers to withdraw up to $60,000 from their RRSP tax-free for a qualifying home purchase. The withdrawal limit was increased from $35,000 to $60,000 in the 2024 federal budget. Unlike the FHSA, the HBP comes with a repayment obligation: you must repay the full amount to your RRSP over 15 years, starting the second year after withdrawal.
HBP Repayment Schedule ($60,000 withdrawal):
Total to repay: $60,000
Repayment period: 15 years
Annual required repayment: $60,000 ÷ 15 = $4,000/year
If you miss a repayment:
The missed $4,000 is added to your taxable income
Tax cost at 30.5%: $4,000 × 30.5% = $1,220 in extra tax that year
If you never repay any of it:
Total added to income over 15 years: $60,000
Total tax cost: $60,000 × 30.5% = $18,300
The FHSA vs HBP Asymmetry
This is the critical difference between the two programs. The FHSA gives you a tax deduction on the way in and a tax-free withdrawal on the way out — a double benefit with zero ongoing obligation. The HBP gives you a tax-free withdrawal only on the condition that you repay it. If you cannot or do not repay, the HBP becomes a taxable RRSP withdrawal spread over 15 years. For a first-time buyer with limited cash flow, this repayment burden is real. Always exhaust your FHSA before touching the HBP.
HBP Repayment Year-by-Year Impact
Here is how the 15-year repayment schedule affects your finances assuming a constant $95,000 income and 30.5% marginal rate:
| Year | Required Repayment | Remaining Balance | Tax If Missed |
|---|---|---|---|
| Year 1 (grace) | $0 | $60,000 | $0 |
| Year 2 | $4,000 | $56,000 | $1,220 |
| Year 5 | $4,000 | $44,000 | $1,220 |
| Year 10 | $4,000 | $24,000 | $1,220 |
| Year 16 | $4,000 | $0 | $1,220 |
The “Tax If Missed” column shows the additional tax you would owe that year if you fail to make the repayment. Over 15 years, the total cost of never repaying is $18,300 in additional tax. For a related look at how RRSP withdrawals are taxed in Alberta, see our Alberta inheritance tax calculator.
Step 3: Combined Down Payment and CMHC Insurance Math
With both accounts fully deployed, the buyer assembles a $100,000 down payment. On a $575,000 home, that is 17.4% — above the 5% minimum but below the 20% threshold that would eliminate the CMHC mortgage insurance requirement.
Minimum Down Payment Calculation ($575,000 home):
First $500,000: 5% = $25,000
Remaining $75,000: 10% = $7,500
Minimum required: $32,500
Your down payment: $100,000 (17.4%)
CMHC Insurance (15%–19.99% down = 2.80% premium):
Mortgage: $575,000 − $100,000 = $475,000
CMHC premium: $475,000 × 2.80% = $13,300
Total mortgage with insurance: $475,000 + $13,300 = $488,300
To avoid CMHC insurance, you would need 20% down: $575,000 × 20% = $115,000. That is $15,000 more than the combined FHSA + HBP maximum. If you have an additional $15,000 in non-registered savings, eliminating the $13,300 CMHC premium saves you money over the life of the mortgage. Without that extra cash, the FHSA + HBP combo at $100,000 is still the most tax-efficient path even with the insurance premium.
CMHC Premium by Down Payment Percentage
| Down Payment % | Down Payment $ | CMHC Rate | CMHC Premium | Total Mortgage |
|---|---|---|---|---|
| 5.65% (minimum) | $32,500 | 4.00% | $21,700 | $564,200 |
| 10% | $57,500 | 3.10% | $16,043 | $533,543 |
| 17.4% (FHSA + HBP) | $100,000 | 2.80% | $13,300 | $488,300 |
| 20% | $115,000 | 0% | $0 | $460,000 |
CMHC premiums are based on the loan-to-value ratio. For homes priced over $500,000 up to $1.5 million, insured mortgages are available to qualified first-time buyers. The premium is added to the mortgage balance and does not require upfront payment.
Step 4: Alberta's No Land Transfer Tax Advantage
Alberta does not charge a land transfer tax — a significant advantage that is easy to overlook when comparing home purchase costs across provinces. On a $575,000 home, the savings versus Ontario and BC are substantial.
| Province | Land Transfer Tax | First-Time Buyer Rebate | Net Cost |
|---|---|---|---|
| Alberta | $0 | N/A | $0 |
| Ontario | $8,475 | −$4,000 | $4,475 |
| British Columbia | $10,000 | −$8,000 | $2,000 |
Alberta charges a land title transfer fee of approximately $350–$500, but this is a fraction of the thousands charged by other provinces. For a detailed comparison across price points, see our Alberta land transfer tax savings calculator.
Step 5: Net After-Tax Cost of Purchase — Full Breakdown
Combining every line item, here is the true cost of purchasing this $575,000 Edmonton home when both the FHSA and HBP are fully utilized:
| Item | Amount |
|---|---|
| Purchase price | $575,000 |
| Down payment (FHSA $40K + HBP $60K) | −$100,000 |
| CMHC insurance premium (2.80%) | +$13,300 |
| Alberta land transfer tax | $0 |
| Estimated legal and closing costs | +$2,500 |
| Total mortgage (with CMHC) | $488,300 |
| FHSA tax refund (permanent savings) | −$12,200 |
| Alberta land transfer tax savings vs Ontario | −$4,475 |
| Net out-of-pocket closing costs | $2,500 |
The $12,200 FHSA refund offsets closing costs and then some. The buyer's true upfront cash outlay is limited to legal fees and minor closing costs — the entire down payment comes from registered accounts. The HBP repayment of $4,000/year begins the second year after purchase and runs for 15 years.
Optimal Withdrawal Order: FHSA First, Then HBP
While both accounts can be used simultaneously, the sequencing matters for tax efficiency. The optimal strategy is to always use the FHSA to its maximum before touching the HBP.
| Feature | FHSA | RRSP HBP |
|---|---|---|
| Maximum withdrawal | $40,000 | $60,000 |
| Tax deduction on contribution | Yes | Yes |
| Tax-free withdrawal | Yes (permanent) | Yes (conditional) |
| Repayment required | No | Yes (15 years) |
| Cost if not repaid | N/A | $18,300 in tax |
| True after-tax value of withdrawal | $40,000 + $12,200 refund | $60,000 (if fully repaid) |
The FHSA provides $52,200 in total value ($40,000 down payment + $12,200 tax refund) with zero ongoing obligation. The HBP provides $60,000 but requires $4,000/year in repayments for 15 years to remain tax-free. For a Quebec buyer weighing the same decision, see our FHSA vs HBP calculator for Quebec.
What If You Only Need $40,000 Down?
On a less expensive home — say a $400,000 condo in Edmonton — the minimum 5% down payment is $20,000. If you have the full $40,000 FHSA balance, you can fund the entire down payment from the FHSA alone, completely avoiding the HBP repayment obligation. The $12,200 tax refund still applies, and with 10% down you face a lower CMHC premium rate of 3.10% instead of 4.00%.
This is another reason to maximize FHSA contributions early. A buyer who opens the FHSA at age 25 and contributes $8,000 annually reaches the $40,000 cap by age 30 — potentially funding the entire down payment from a single account with no repayment strings attached. For Alberta newcomers considering the HBP specifically, see our Alberta newcomer Home Buyers' Plan calculator.
Mortgage Qualification: Stress Test at $95K Income
Having the down payment is only half the equation. The buyer must also qualify for the mortgage under the federal stress test, which requires proving affordability at the higher of the contract rate + 2% or 5.25%.
Stress Test Estimate ($95K income, single buyer):
Mortgage amount: $488,300 (with CMHC)
Assumed contract rate: 4.5%
Stress test rate: 6.5% (contract + 2%)
25-year amortization
Monthly payment at stress test rate: ~$3,300
Gross Debt Service (GDS) ratio: ~41.7%
Maximum GDS allowed: 39% (insured mortgage)
A single buyer at $95K may be tight on qualification for this mortgage amount. A co-buyer or slightly lower purchase price may be needed.
The stress test is a separate constraint from the down payment. Even with $100,000 down, the buyer's income must support the monthly payment at the stress-tested rate. For a detailed walkthrough of the Alberta stress test, see our Alberta mortgage stress test calculator.
Timeline: Building to $100K in Registered Savings
A buyer starting from zero would need approximately five years to build up the full FHSA balance, plus sufficient RRSP room for the HBP. Here is a realistic savings timeline:
| Year | FHSA Contribution | FHSA Balance | RRSP Contribution | RRSP Balance |
|---|---|---|---|---|
| Year 1 | $8,000 | $8,000 | $12,000 | $12,000 |
| Year 2 | $8,000 | $16,000 | $12,000 | $24,000 |
| Year 3 | $8,000 | $24,000 | $12,000 | $36,000 |
| Year 4 | $8,000 | $32,000 | $12,000 | $48,000 |
| Year 5 | $8,000 | $40,000 | $12,000 | $60,000 |
This assumes $8,000/year to the FHSA (maximum) and $12,000/year to the RRSP, for a total savings rate of $20,000/year. At $95,000 gross income, that is approximately 21% of gross — aggressive but achievable for a single person without dependents, especially with the tax refunds reinvested. Investment growth within the accounts would increase the balances further.
Important Disclaimer
This article provides general information about the First Home Savings Account and the RRSP Home Buyers' Plan as they apply in Alberta. It is not financial, tax, or legal advice. FHSA and HBP rules are set by the federal government and administered by the CRA — program limits, eligibility criteria, and repayment rules may change. Tax rates referenced are based on 2025 federal and Alberta provincial brackets and are approximate. CMHC insurance premiums are subject to change and may vary by insurer (Sagen and Canada Guaranty also provide mortgage insurance). The stress test calculation is illustrative only — actual mortgage qualification depends on your complete financial profile including debts, credit score, and property taxes. Consult a qualified financial advisor or mortgage professional in Alberta for advice specific to your circumstances.