How to Use a First Home Savings Account (FHSA)
The First Home Savings account is a savings and investment tool designed to help first-time home buyers afford their initial run at the housing market.
Combining aspects of tax-free savings accounts and registered retirement savings plans, the FHSA is a registered account in which you can save up to $40,000 for use as the down payment on a house.
FHSA quick facts
You can contribute up to $8,000 per calendar year.
Any unused contribution amount carries over to the following year.
Contributions above the limit are taxed at a rate of 1% per month on the excess contribution amount until the excess amount is removed.
Eligible contributions are tax-deductible.
You can contribute to a spouse or common-law partner's FHSA. Money you provide can’t be claimed as a deduction for tax purposes.
Eligibility requirements
To open a First Home Savings Account, you must be:
A resident of Canada.
At least 18 years old.
A first-time home buyer.
Younger than 71 in the year you open the account.
A first-time home buyer.
FHSAs use different definitions of “first-time home buyer” that apply to opening an account and making withdrawals:
For opening an account: You’re considered a first-time home buyer if you or your spouse/common law partner didn’t own and use a qualifying home as your principal residence in the calendar year before the account is opened, or at any time in the preceding four calendar years.
For making withdrawals: You’ll be considered a first-time home buyer if you didn’t live in a qualifying home as your principal residence in the calendar year before your withdrawal — with the exception of the 30 days before making the withdrawal — or at any time during the previous four years.
Read the 2025 Canadian Home Buyer Report
Find out how would-be buyers and current home owners are feeling about the state of the market.
Withdrawal guidelines
When you purchase your first home, you submit a request to your FHSA issuer that confirms your eligibility to make a qualifying withdrawal. If all’s well, you’ll receive your savings and put the full amount toward your down payment, deposit or closing costs, tax-free.
Because the First Home Savings Account is designed to help home buyers, only withdrawals put toward a home purchase will qualify and receive tax-free treatment.
To make a qualifying withdrawal, you must:
Be a first-time home buyer and reside in Canada at the time of your withdrawal.
Have a written agreement to buy or build a home in Canada before October 1 in the year after the year you withdraw money.
Intend to use the home as your principal residence within one year of buying or building it.
Non-qualifying FHSA withdrawals will be added to your taxable income for the year in which you make the withdrawal, which could lead to an outsized tax bill. Your FHSA provider will also withhold tax on non-qualifying withdrawals.
You can, however, transfer money from a First Home Savings Account to an RRSP or registered retirement income fund without triggering taxes. Generally, these transfers won’t affect the limits for your lifetime FHSA contributions or RRSP contributions.
Investing FHSA funds
You can use the money in your FHSA to purchase various investment products, like mutual funds, stocks, bonds and guaranteed investment certificates.
You won’t have to pay taxes on any of the gains these investments generate, which is a nice perk.
You can set up a First Home Savings Account at any financial institution that offers TFSAs and RRSPs: banks, credit unions, life insurance companies and Canadian trust companies. An FHSA should be easy to open and fairly straightforward to use.
Best mortgage rates in Canada
Compare offers from Canada’s top mortgage lenders and brokers.
Will an FHSA really help you buy a house?
That’s the $40,000 question. Answering it means weighing the FHSA’s benefits and drawbacks.
FHSA pro: Tax advantages
The money you save by not having to pay tax on your investment gains means you keep more of your earnings.
Depending on how much your tax refund improves, you could also use it to pay down outstanding debt and improve your credit standing — all things that may help you get approved for a mortgage at a lower interest rate in the future
FHSA con: Modest contribution limit
Unless housing prices fall dramatically, FHSAs won’t cover much more than deposits on pre-construction properties or closing costs in most markets. But socking $40,000 away in a FHSA is arguably a better option than stashing it in a high-interest savings account or a TFSA that isn’t being used for investing.
And if that first home remains elusive, you can always transfer your FHSA savings to an RRSP or RRIF and feel good about putting some money away for retirement. It’s not a bad Plan B.
Is the FHSA better than the Home Buyers’ Plan?
It depends how you look at it. The Home Buyers’ Plan allows you to use up to $60,000 of your RRSP savings for a first home purchase, which would provide a larger down payment boost than an FHSA. But unlike the HBP, the FHSA doesn’t require you to repay the amount withdrawn.
You have the option of combining your FHSA with the Home Buyers’ Plan and giving your home buying budget even more juice. But because of the FHSA’s annual contribution limits, it’ll take time to grow your account’s balance. That may not be helpful if your RRSP is already well funded and you’d like to buy a home sooner than later.
Here's where you can open an FHSA
You can set up a First Home Savings Account at any financial institution that offers TFSAs and RRSPs: banks, credit unions, life insurance companies and Canadian trust companies.
Click on the buttons below to view more info about the FHSAs offered by these institutions (link will open in a new window).
Frequently asked questions
How much can I contribute to my FHSA in 2025?
How much can I contribute to my FHSA in 2025?
The annual contribution limit in 2025 is $8,000. Any amount you don’t contribute can be carried over to the following year. If you save $5,000 in an FHSA in 2025, for example, you’ll have an $11,000 contribution limit in 2026.
Is an FHSA worth it?
Is an FHSA worth it?
There aren’t too many drawbacks of opening an FHSA. You’ll enjoy tax benefits and can potentially increase your home buying fund by making savvy investments with your deposits. If you don’t buy a home, you can always transfer your FHSA funds into an RRSP.
Who qualifies as a first time home buyer?
Who qualifies as a first time home buyer?
You're eligible if you:
Have not lived in a home you owned in the calendar year before opening your FHSA.
Have not lived in a home you owned at any time in the preceding four years.
Don’t own property through beneficial ownership, like a corporation.
Can I use an FHSA more than once?
Can I use an FHSA more than once?
Using the FHSA twice is technically possible, but it might be a little unrealistic. You’d have to sell your home, rent or secure other accommodations for four years and spend up to another half-decade saving $40,000 for your next purchase.
DIVE EVEN DEEPER
Barry Choi
Clay Jarvis
Clay Jarvis