General information only — not financial advice for your situation.
This is a learning tool. Always check CRA My Account records and talk to a qualified professional for your own numbers.
Plain English
The FHSA was built for first-time buyers, so once you own a home, you can't use it. Now the question is simpler: RRSP or TFSA? If you're in a high tax bracket now and expect to be in a lower one when you retire, the RRSP is better — you save tax at a high rate now and pay it back at a low rate later. If your rate is likely to stay the same or go up, the TFSA is better because you never pay tax on withdrawals. And if you have a mortgage with a rate over 5%, consider putting extra money toward that — paying off high-interest debt is like earning a guaranteed return.
You earn $95,000 and have a 5.5% mortgage. Paying an extra $5,000 toward the mortgage saves you ~$275/year in guaranteed, after-tax interest. A TFSA earning 6% returns would yield $300 before risk, making the TFSA slightly better — but the mortgage paydown is risk-free. At a 4% mortgage, the TFSA wins more clearly.
Show the analysis
With the FHSA disqualified, the optimization problem reduces to the standard RRSP/TFSA arbitrage: RRSP generates superior terminal value when the contribution marginal rate exceeds the withdrawal marginal rate, and vice versa. At mathematical equality, both are identical. For homeowners, the mortgage rate introduces a third variable: a 5%+ mortgage offers a guaranteed, risk-free after-tax return that non-registered investing (subject to market risk and tax drag) cannot reliably beat.
Mortgage paydown: $5,000 extra on a 5.5% mortgage = $275/year guaranteed savings (tax-free since principal residence mortgage interest is non-deductible in Canada). TFSA at 7% nominal return on $5,000 = $350/year, but subject to market risk. RRSP at $5,000 at 31.48% rate: $1,574 refund reinvested, but eventual withdrawal taxed. Break-even mortgage rate vs. expected market return: approximately 5% after adjusting for risk.
Edge cases
- If you're carrying high-interest consumer debt (credit cards at 19.9%), always pay that off first — it's a guaranteed 19.9% after-tax return.
- Homeowners who divorce or separate and later become eligible as first-time buyers again may regain FHSA access after 4 years of non-ownership.
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Every number on this site is sourced from CRA publications, the Income Tax Act, or provincial fiscal releases. We show the math, cite the sources, and never tell you what to do with your money.