The First Home Savings Account (FHSA) is a relatively new registered account (launched in 2023) that helps first-time homebuyers save for a down payment. Like an RRSP, contributions are tax-deductible. Like a TFSA, qualifying withdrawals (to buy your first home) are completely tax-free. You can contribute up to $8,000 per year and $40,000 lifetime.
The FHSA at a Glance
The FHSA is the most tax-advantaged account in Canada for one very specific purpose: saving for your first home purchase. It combines the best feature of two other accounts:
- From the RRSP: Contributions reduce your taxable income (i.e., you get a tax deduction and potentially a refund)
- From the TFSA: Qualifying withdrawals to buy a first home are completely tax-free
If you are planning to buy a home in Canada within the next 1–15 years, the FHSA should be a priority.
Who Is Eligible?
To open an FHSA, you must:
- Be a Canadian resident
- Be at least 18 years old (or 19 in provinces where the age of majority is 19)
- Be a first-time home buyer — meaning you have not owned a qualifying home that you lived in at any point during the current calendar year, or during the preceding four years
Good news for newcomers: Most newcomers qualify as first-time homebuyers because they did not own a home in Canada in the preceding four years.
Contribution Limits
Carry-forward example: If you open an FHSA in 2025 but only contribute $3,000, you can contribute up to $13,000 in 2026 ($8,000 for 2026 + $5,000 carried forward from 2025).
Tax Benefits: Both Coming In and Going Out
On the Way In — Tax Deduction
Like an RRSP, every dollar you contribute to an FHSA is deducted from your taxable income. If you contribute $8,000 and your marginal tax rate is 40%, your tax refund is approximately $3,200.
Unlike an RRSP, you can also carry forward unused deductions — so you do not have to claim the deduction in the same year you contribute.
On the Way Out — Tax-Free Withdrawal
When you make a qualifying first home purchase, all withdrawals from the FHSA are completely tax-free: contributions, growth, and all. You pay zero tax.
This is the key advantage over the RRSP's Home Buyers' Plan — RRSP withdrawals via the HBP must be repaid over 15 years. FHSA withdrawals for a first home never need to be repaid.
What If You Don't Buy a Home?
If you open an FHSA but never end up buying a home (or if you close the account after 15 years), you can transfer the balance to your RRSP or RRIF with no tax consequences. The balance is not lost — it simply becomes RRSP savings.
FHSA vs RRSP Home Buyers' Plan (HBP): Which Is Better?
Many first-time buyers use both — maxing out the FHSA first, then also using the HBP from their RRSP for additional funds.
How to Open an FHSA
All major Canadian banks and most investment platforms now offer FHSAs:
- TD, RBC, Scotiabank, BMO, CIBC
- Questrade (popular for lower-fee investing)
- Wealthsimple
- EQ Bank (FHSA savings account)
Open the account the same way you would a TFSA or RRSP — in person or online, with your SIN.
Example Scenarios
Frequently Asked Questions
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