Key Points
- Contribute up to $8,000/year, to a lifetime max of $40,000
- Contributions are tax-deductible (like an RRSP)
- Growth and withdrawals for a home purchase are tax-free (like a TFSA)
- Must be a first-time homebuyer and Canadian resident
- Can be combined with the RRSP Home Buyers' Plan
The First Home Savings Account (FHSA) launched in 2023 and is arguably the best savings vehicle for first-time homebuyers that Canada has ever created. If you're planning to buy your first home, you need to know about this.
What Is the FHSA?
The FHSA is a registered account that combines the tax advantages of both an RRSP and a TFSA — specifically for saving toward your first home purchase. Contributions reduce your taxable income (like an RRSP). Investment growth inside the account is tax-free (like a TFSA). Qualifying withdrawals for a first home purchase are completely tax-free.
The Numbers
Annual contribution limit: $8,000. Lifetime contribution limit: $40,000. Unused contribution room carries forward (up to $8,000/year carry-forward). The account can remain open for 15 years or until you turn 71, whichever comes first.
Who Qualifies?
To open and use an FHSA, you must be a Canadian resident, be at least 18 years old, and be a first-time homebuyer (haven't owned a home in which you lived at any time during the current year or the preceding 4 calendar years).
How to Use It With the RRSP Home Buyers' Plan
Here's where it gets really powerful: you can combine your FHSA withdrawal with the RRSP Home Buyers' Plan, which lets you withdraw up to $35,000 from your RRSP tax-free for a first home purchase. Combined, that's up to $75,000 in tax-advantaged funds for your down payment — per person. For couples, that's up to $150,000.
Should You Open One Right Now?
Yes — even if you're not planning to buy for a few years. The carry-forward room starts accumulating as soon as you open the account. The sooner you open it, the more room you'll have when you're ready to buy. Many major banks and online brokerages offer FHSAs. Open one, start contributing what you can, and invest it for growth.
Have questions about how the FHSA fits into your home-buying strategy? That's exactly the kind of thing we cover in our initial conversations. Book a call.
Have a specific question about your situation? Every mortgage is unique. This article covers the general principles, but your circumstances might change the picture. Reach out and I'll give you a direct, honest answer.