The First Home Savings Account (FHSA) is a registered account that helps first-time buyers in Canada save for a home. Contributions are tax-deductible like an RRSP, and qualifying withdrawals to buy a first home are tax-free like a TFSA. You can contribute up to $8,000 per year, to a lifetime maximum of $40,000.
Quick answer: if you are an adult Canadian resident who has not owned and lived in a home in the current year or the previous four calendar years, an FHSA is usually worth opening early, even with a small deposit, because contribution room only starts accumulating once the account is open.
General information, not financial or tax advice. Confirm your situation with the Canada Revenue Agency or a qualified professional.
Who can open an FHSA?
- You are a resident of Canada.
- You are at least 18 years old (or the age of majority in your province, where it is higher, for opening a contract), and not older than 71 at the end of the year.
- You are a first-time home buyer: you did not live in a home you or your spouse or common-law partner owned, as your principal residence, at any time in the current calendar year or the previous four calendar years.
The official rules are on the CRA’s First Home Savings Account page.
Contribution limits
| Rule | Amount |
|---|---|
| Annual participation room | $8,000 |
| Lifetime limit | $40,000 |
| Maximum unused room carried forward | $8,000 |
| Maximum contribution in one year (with carry-forward) | $16,000 |
Room only begins in the year you open your first FHSA. If you open one and contribute nothing, $8,000 of room still carries into the next year. Over-contributions are subject to a monthly tax, so track your room carefully.
How the tax benefits work
- Deduction: contributions can be deducted from your taxable income. You can also carry the deduction forward to a later year when your income is higher.
- Tax-free growth: investment income earned in the account is not taxed while it stays there.
- Tax-free qualifying withdrawal: money withdrawn to buy a qualifying first home is not taxed.
That combination is what makes the FHSA unique compared with the other registered accounts.
How long can the account stay open?
An FHSA can generally stay open until the earliest of: 15 years after you open it, the end of the year you turn 71, or the end of the year following your first qualifying withdrawal. If you do not buy a home, you can transfer the balance to your RRSP or RRIF without affecting your RRSP contribution room, or withdraw it as taxable income.
FHSA vs TFSA vs RRSP
| Feature | FHSA | TFSA | RRSP |
|---|---|---|---|
| Contributions deductible | Yes | No | Yes |
| Withdrawals taxed | No, if qualifying | No | Yes (except Home Buyers’ Plan, which must be repaid) |
| Main purpose | First home | Any goal | Retirement |
| Lifetime limit | $40,000 | Cumulative annual room | Based on earned income |
For a broader comparison of the two older accounts, see our TFSA vs RRSP guide. In many cases, the FHSA and the RRSP Home Buyers’ Plan can be used together for the same purchase.
Making a qualifying withdrawal
- You must be a first-time home buyer at the time of the withdrawal.
- You need a written agreement to buy or build a qualifying home located in Canada, with a closing date before October 1 of the year following the withdrawal.
- You must intend to occupy the home as your principal residence within one year after buying or building it.
- Your financial institution will ask you to fill out the CRA form for a qualifying withdrawal.
Practical tips
- Open the account early to start accumulating room, even with a small deposit.
- Match the investments to your timeline: money needed in a year or two is usually kept in low-risk products.
- Keep your credit healthy for your mortgage application; see how to check your credit score for free.
- Couples can each open an FHSA if each one qualifies.
FAQ
Can I have more than one FHSA?
Yes, but your total contributions across all FHSAs cannot exceed your room.
Do I have to buy a home?
No. If you never buy, you can transfer the money to an RRSP or RRIF without using RRSP room, or withdraw it as taxable income.
Can I invest in stocks inside an FHSA?
Yes, qualified investments similar to those allowed in a TFSA or RRSP, such as cash, GICs, bonds, mutual funds, ETFs and listed stocks, depending on the institution.
Conclusion
For eligible first-time buyers, the FHSA combines a tax deduction with tax-free withdrawals, which no other account offers. Opening one early, even with little money, maximizes the room you can use when you are ready to buy.