Short answer: the First Home Savings Account (FHSA) lets first-time buyers in Canada save up to $8,000 a year and $40,000 in total for a home. Contributions are tax-deductible like an RRSP, and withdrawals for a qualifying first home are tax-free like a TFSA. If you never buy, you can move the money to your RRSP without using any RRSP room. For most people who might buy a first home, it's worth opening one now, even with $0.
Who can open one
- You live in Canada.
- You're at least 18 and no older than 71. Some providers require 19 in provinces where that's the age of majority.
- You're a first-time home buyer: you haven't lived in a home that you or your spouse or common-law partner owned, at any time this year or in the previous four calendar years.
The limits
| Rule | Amount |
|---|---|
| Yearly limit | $8,000 |
| Lifetime limit | $40,000 |
| Carry-forward | Up to $8,000 of unused room, so at most $16,000 in one year |
| When room starts | Only once you open your first FHSA |
That last rule is the important one. Room doesn't build up before you open an account, so opening one early, even with nothing in it, starts the clock.
The tax breaks
- Going in: contributions are deductible from your income, like an RRSP. You can also save the deduction for a later year when your income is higher.
- While it grows: no tax on interest, dividends or gains.
- Coming out: a qualifying withdrawal for your first home is completely tax-free, and you never pay it back.
What counts as a qualifying withdrawal
You need a written agreement to buy or build a home in Canada before October 1 of the year after the withdrawal, and you must plan to live in it within a year of buying or building it. You also need to still be a first-time buyer when you take the money out.
If you never buy
An FHSA has to be closed by the end of the earliest of these:
- the year of its 15th anniversary,
- the year you turn 71, or
- the year after your first qualifying withdrawal.
If you don't buy, you can transfer the balance to your RRSP or RRIF tax-free, and it doesn't use any RRSP room. Withdrawing it as cash instead means paying income tax on it.
Example: Sam, 25
Sam opens an FHSA in 2026 and contributes $3,000. The unused $5,000 carries forward, so in 2027 Sam can contribute up to $13,000: the new $8,000 plus the $5,000 carried over. At a 30% marginal tax rate, the $3,000 contribution means about a $900 tax refund. Hypothetical example for illustration only.
FHSA and the Home Buyers' Plan
You can use both for the same home. The Home Buyers' Plan lets you borrow up to $60,000 from your RRSP, but you have to pay it back over time. FHSA withdrawals don't have to be repaid, which is why most first-time buyers fill the FHSA first.
Common questions
Can a couple each have an FHSA?
Yes. Each partner who qualifies can have their own, so a couple can save up to $80,000 together, plus Home Buyers' Plan withdrawals.
What happens if I put in too much?
Like a TFSA, there's a tax of 1% per month on the excess until you remove it.
Can I move money from my RRSP into an FHSA?
Yes. A direct transfer from an RRSP uses FHSA room but doesn't give you a new deduction, since you already got one when you put the money into the RRSP.
What should I invest in?
It depends on when you plan to buy. Money you need within a couple of years is usually kept somewhere stable, like a high-interest savings ETF or GICs. If your purchase is further away, many people use a low-fee, all-in-one ETF.
The full plan
The Investing Starter Guide, Canadian Edition covers the FHSA, TFSA and RRSP, including the order to fill them and how to place your first purchase. The Canadian Starter Kit adds a Portfolio Tracker that keeps track of your FHSA carry-forward for you.
Educational content only, not financial, tax or legal advice. Confirm current rules with the CRA (canada.ca).