First Home Savings Account (FHSA)

A First Home Savings Account (FHSA) is a registered savings account that lets a first-time home buyer save for a qualifying home purchase, with contributions that may be deducted from taxable income and withdrawals for the purchase that are not taxed. It is a federal program administered by the Canada Revenue Agency (CRA) and offered by banks, credit unions, and other financial institutions.

How an FHSA works

An FHSA blends features of two familiar registered accounts. Contributions are generally deductible from income for the year, investment growth inside the account is not taxed while it stays there, and a withdrawal made to buy a qualifying home is tax-free. The federal government sets an annual contribution limit and a lifetime limit, and unused contribution room can be carried forward in some circumstances. Confirm the current limits and eligibility rules with the CRA before relying on them.

To open an account, the holder must generally be a resident of Canada, be at least the age of majority, and not have owned and lived in a home during a specified period in the recent past. The account also has a maximum lifespan, and funds not used for a home can typically be transferred to an RRSP or RRIF without immediately using contribution room, or withdrawn and taxed as income.

FHSA compared with the RRSP Home Buyers' Plan

Both programs help first-time buyers, but the mechanics differ:

FHSA: contributions can reduce taxable income, qualifying withdrawals are tax-free, and the money does not have to be repaid.
Home Buyers' Plan: withdrawals for a first home are tax-free at the time, but the amount must be repaid to the RRSP on a set schedule or it is added to income.
TFSA: no deduction for contributions, but withdrawals are tax-free for any purpose, including a down payment.

An eligible buyer may be able to use more than one of these programs, subject to the rules of each.

Why it matters to a borrower

The down payment is usually the largest single obstacle to a first purchase. Because an FHSA shelters both the contribution and the eventual withdrawal, it can stretch savings faster than a non-registered account and pairs well with other first-time home buyer programs in Canada. Buyers still need to plan for closing costs such as land transfer tax, legal fees, and title insurance. An eligibility calculator can help show how the various programs interact, and it is worth confirming how an FHSA fits your tax situation with a qualified adviser.

Frequently asked questions

Can I open an FHSA if I already have an RRSP or TFSA?

Yes. An FHSA is separate from an RRSP and a TFSA, and holding one does not prevent you from holding the others. Contributions to each account are subject to its own limits. Because an FHSA offers a deduction like an RRSP and tax-free withdrawals like a TFSA, some buyers use more than one account for a first purchase.

What happens to my FHSA if I don't buy a home?

If you do not make a qualifying home purchase, the account has a maximum lifespan set by the federal government. Before it ends, unused funds can generally be transferred to an RRSP or RRIF without immediately affecting contribution room, or withdrawn and taxed as income. Confirm the specific deadlines with the CRA.

How much can I contribute to an FHSA?

The federal government sets an annual contribution limit and a lifetime contribution limit, and unused room may be carried forward in some circumstances. Because these figures change and depend on your situation, check the current amounts on the Canada Revenue Agency website rather than relying on an older number.