What Is an FHSA? The First Home Savings Account Explained

The First Home Savings Account, or FHSA, is a registered account in Canada built for one goal: saving for your first home. It borrows the best part of two older accounts. Like an RRSP, your contributions are tax-deductible. Like a TFSA, money you take out for a qualifying home purchase comes out tax-free.

Planning your first home? Check what you could afford with our free Canadian mortgage calculator.

Who can open an FHSA

You need to be a Canadian resident, at least 18, and a first-time home buyer. The tax rules define that as not having lived in a home you owned, or your spouse owned, during the current year or the previous four calendar years.

Contribution limits

You can contribute up to $8,000 per year, with a lifetime cap of $40,000. If you do not use the full $8,000 in a year, you can carry forward unused room, up to $8,000, into the next year. Room only starts building once you open the account, so opening one early matters even if you cannot fund it fully yet.

How the tax benefit works

• Contributions are deductible from your income, which can lower your tax bill or raise your refund.
• Investments inside the account grow without tax.
• Withdrawals for a qualifying first home purchase are not taxed.

How long you can keep it

An FHSA must close by the end of the 15th year after you open it, or the year you turn 71, whichever comes first. If you do not buy a home, you can move the balance into your RRSP or RRIF without using up your RRSP contribution room.

FHSA vs the RRSP Home Buyers’ Plan

The Home Buyers’ Plan lets you borrow from your RRSP for a first home, but you have to pay that money back over 15 years. FHSA withdrawals do not need to be repaid. Many buyers use both for the same purchase, but check the current rules and limits on the Canada Revenue Agency website before you plan around them.

What to hold inside it

Match the investments to your timeline. If you plan to buy within a few years, a high-interest savings account or GICs keep your money steady. If you are saving for a purchase many years away, low-cost index ETFs can grow more, with the risk that the balance drops when you need it.

This article is general information, not financial or tax advice. Rules can change, so confirm the details with the CRA or an advisor. Want to talk it through with other savers? Join the Smart Money Watch community.