FHSA: Buy a Starter Condo Now or Keep Investing?

Every December, my husband and I do the same small ritual. We check that each of our FHSAs has received its full contribution for the year, look at the balances, and then have the same conversation we had the December before.

“Should we just use it now and buy something small?”

“Or let it keep growing until we can buy the home we actually need?”

This December will be our third year of maxing out both accounts. And we still don’t have an answer. So I’m writing down how we’re thinking it through, in case you’re stuck in the same place.

Where we’re starting from

Here’s our honest situation:

• We’re a family of five, renting in the Victoria area.
• We don’t own property anywhere, so we qualify for every first-time program in Part 1.
• We each have our own FHSA and have contributed the maximum every year. By the end of this year, that’s $24,000 each in contributions.
• Each of us has a $40,000 lifetime limit, so two more years of contributions will max us out.
• Everything is invested in US equity ETFs, and I’ll admit our approach is on the aggressive side. Right now, the accounts are in a nice gain.
• Our goal is more than $100,000 across both accounts.

The house we’d love is a detached home with enough bedrooms. In Part 2, the Victoria Core benchmark for that was about $1.28 million, which means a down payment of over $100,000 and no first-time PTT exemption. A condo is far more reachable. But it’s small for five people.

Option A: Use the FHSAs now and buy a starter condo

What pulls us toward it

• Rent stops disappearing. Part of each mortgage payment builds equity in something we own.
• The market is calmer. Victoria entered a buyer’s market in September 2026 for the first time in years, according to the Victoria Real Estate Board. That means more choice and more room to negotiate.
• We stop guessing. There’s real relief in being “in” the market instead of watching it.

What holds us back

• We use our once-in-a-lifetime benefits on a small home. The FHSA, the BC PTT exemption and the federal first-time credits would go toward the starter condo. When we move up later, we’re no longer first-time buyers.
• Space. Five people in a two-bedroom condo is tight, and we’d likely need to move within a few years. Selling and buying again means paying property transfer tax, legal fees and realtor commissions a second time.
• Condos aren’t low-cost. As Part 3 and Part 5 showed, strata fees, insurance, property tax and possible special levies add up to roughly $875 to $1,075 a month in our example, before the mortgage.

Option B: Keep growing the FHSAs

What pulls us toward it

• Tax-free growth keeps working. Every dollar of growth inside an FHSA comes out tax-free when it’s used for a qualifying purchase.
• Our benefits go toward the home we actually need. A larger home gets the full force of our down payment.
• The worst case isn’t that bad. If we never buy, the CRA allows the money to move into an RRSP tax-free without using our RRSP room. An FHSA has to be closed by the end of the year of the earliest of these: its 15th anniversary, your 71st birthday, or the year after your first qualifying withdrawal. So we have time.

What holds us back

• Prices and rates can move against us. Waiting doesn’t guarantee a better deal.
• Rent keeps going out every month.
• Market risk becomes timing risk. This is the one I think about most.

The part I don’t see many blogs talk about

Long-term investing advice usually says: stay invested, ride out the dips, think in decades. That works for retirement money.

But a down payment has a date attached. If the market drops 30% the year we want to buy, that loss isn’t on paper anymore. It’s a smaller down payment, a smaller budget, or a delayed move.

Here’s a simple illustration with round numbers, not our actual balances:

A $30,000 drop is the difference between a condo and a townhouse in some neighbourhoods. With an aggressive portfolio, that kind of swing isn’t rare.

So whichever option we pick, we’ve agreed on one thing: once we set a target purchase date, we’ll gradually move part of the FHSA into something less volatile as that date gets closer. We haven’t decided the exact timing yet, and that’s a decision we’ll revisit every year.

Condo or house: neither one is “the cheap option”

Before I started this series, I assumed a condo was the budget-friendly choice and a house was the expensive dream. It’s more complicated than that.

A condo spreads repair costs out through monthly fees. A house hits you with them all at once. Either way, a home costs money every month you own it. The question is which kind of cost fits your family better.

The questions we’re asking ourselves

We don’t have a formula. But these questions are helping us more than any calculator:

• How long would we really stay in a starter condo? If it’s under five years, the cost of selling and buying again eats into the benefit.
• Can we afford the condo’s monthly costs and still keep contributing to savings? If buying means stopping all savings, we’re not ready.
• What would a 30% market drop do to our plan? If the answer is “ruin it,” our portfolio is too risky for this goal.
• Would we rather spend our first-time benefits on the home we want for the long term?

Where we’ve landed, for now

I wish I could end this with a clear decision. I can’t, and I think that’s okay.

What has changed is how we talk about it. Two years ago, buying a home felt like a vague wish we’d get to “someday.” Now we argue about strata fees, stress tests and asset allocation at the kitchen table. For two immigrants who started from zero here, that already feels like real progress.