The Bottom Line
- Open it today: Even if you only deposit $1, the 5-year clock starts ticking.
- $8,000 per year: Tax-deductible. Up to $16,000 in year two if you had unused room.
- $40,000 lifetime max: 100% tax-free when withdrawn for a qualifying home.
What is the First Home Savings Account (FHSA)?
Introduced by the Government of Canada in 2023, the First Home Savings Account (FHSA) is arguably the most powerful savings vehicle ever created for first-time home buyers in Canadian history. It's a registered plan that lets eligible Canadians save up to $40,000 lifetime toward the purchase of their first home — with a tax deduction on contributions (like an RRSP) and completely tax-free withdrawals when buying (like a TFSA).
Put simply: you get taxed on neither end. That can translate to a real after-tax advantage of $10,000–$20,000 or more depending on your marginal tax bracket.
Who Qualifies?
To open and contribute to an FHSA, you must meet all of the following conditions at the time of opening:
- Canadian resident: You must be a tax resident of Canada.
- Age: You must be at least 18 years old and no older than 71.
- First-time buyer: You, or your spouse/common-law partner, must not have owned and lived in a qualifying home (a principal place of residence) at any time during the current calendar year, or during the preceding four calendar years.
If you previously owned a home but haven't lived in one you owned in the last 4 years — you still qualify.
How Much Can You Contribute?
- Annual limit: $8,000 per year, indexed to the year you open the account.
- Carry-forward: If you contribute less than $8,000 in a given year, you can carry forward up to $8,000 of unused room to the following year — so your max in any given year is $16,000.
- Lifetime limit: $40,000 total across all your FHSAs.
- Tax deduction: Your annual contribution is fully tax-deductible on your federal and provincial income tax return — just like an RRSP contribution.
How to Open an FHSA
Most major financial institutions in Canada now offer FHSAs, including TD, RBC, Scotiabank, BMO, CIBC, Fidelity, and Questrade. Opening one takes less than 15 minutes online in most cases.
- Confirm you meet the eligibility criteria above.
- Log in to your bank, investment brokerage, or credit union's online portal.
- Select "Open a New Account" and choose the FHSA option.
- Make your first contribution — even a small one — to start the account clock and accumulate room.
Pro Tip: Open the account even if you don't have the full $8,000 to deposit right away. The contribution room doesn't accumulate until you have an open account, so every month you delay is room lost.
How to Withdraw (Qualifying Withdrawal)
When you're ready to purchase your first home, a qualifying FHSA withdrawal is fully tax-free. You must:
- Have a written agreement to buy or build a qualifying home before October 1 of the year following withdrawal.
- Be a first-time home buyer at the time of withdrawal.
- Complete Form RC720 (Proposing a Home Purchase) and submit it to your financial institution.
FHSA + RRSP Home Buyers' Plan: Can You Stack?
Yes — and you absolutely should. A first-time buyer can use an FHSA withdrawal and an RRSP Home Buyers' Plan (HBP) withdrawal on the same home purchase. That's up to $40,000 (FHSA) + $60,000 (HBP) = $100,000 per person in tax-sheltered down payment funds, or $200,000 for a couple.
Unlike an HBP withdrawal, an FHSA withdrawal never needs to be paid back into the account.
What If You Don't Buy?
If you don't purchase a home within 15 years of opening your first FHSA, you can transfer the balance tax-free into your RRSP — preserving all the contribution room benefits without any immediate tax hit. No home purchase required to benefit.
Official Government Source: CRA — First Home Savings Account Overview
Note: The First-Time Home Buyer Incentive (shared equity mortgage) was discontinued by the federal government in 2024. The FHSA is now the primary vehicle for first-time buyer tax relief.