FHSA (First Home Savings Account)
The FHSA is a registered savings account introduced in 2023 that combines the best features of an RRSP and TFSA for first-time home buyers. Contributions are tax-deductible (like an RRSP), investment growth is tax-free, and qualifying withdrawals to purchase a first home are also tax-free (like a TFSA) — a triple tax advantage.
The annual contribution limit is $8,000, with a lifetime maximum of $40,000. Unused contribution room can be carried forward to the following year (up to $8,000 maximum carry-forward). At a 40% marginal rate, maximizing your FHSA contributions would save $16,000 in tax over 5 years.
To open an FHSA, you must be a Canadian resident aged 18–71 who has not lived in a home you or your spouse owned in the current year or the preceding 4 calendar years. The account must be used within 15 years of opening, or by December 31 of the year you turn 71. Unused funds can be transferred to an RRSP or RRIF without affecting your contribution room.
How it works
Unlike TFSA room, which begins accumulating automatically at age 18 whether or not you've opened an account, FHSA contribution room only starts building in the calendar year you actually open an FHSA — so opening the account earlier, even with a small initial deposit, locks in that year's $8,000 of room even if you don't contribute the full amount right away.
Because the FHSA and the Home Buyers' Plan are separate programs with separate qualifying rules, a first-time buyer can use both for the same purchase — withdrawing tax-free from an FHSA and simultaneously withdrawing from an RRSP under the HBP — substantially increasing the tax-sheltered funds available for a down payment compared with relying on either program alone.
If you don't end up buying a qualifying home, you're not required to withdraw the money and pay tax on it: you can transfer the FHSA balance to an RRSP or RRIF tax-free, without it counting against your regular RRSP contribution room, at any point before the account must close — within 15 years of opening, or by December 31 of the year you turn 71. Taking the money out directly instead of transferring it, when it isn't for a qualifying home purchase, is taxed as income in that year.
Example: the tax savings from maximizing FHSA contributions
Say you contribute the full $8,000 annual limit in your first year. At a 40% marginal rate, that deduction saves you $8,000 x 40% = $3,200 in tax that year alone.
Keep contributing $8,000 a year for 5 years and you reach the $40,000 lifetime FHSA limit, having deducted $40,000 in total. At the same 40% marginal rate, that adds up to $40,000 x 40% = $16,000 in tax savings over the 5 years — on top of any tax-free growth the account earned along the way.
Frequently asked questions
Can I use both the FHSA and the Home Buyers' Plan for the same home purchase?
Yes — they're separate programs with separate qualifying rules, so a first-time buyer can withdraw from both an FHSA and an RRSP under the HBP for the same purchase, increasing the total tax-sheltered funds available for a down payment.
What happens to my FHSA if I never buy a qualifying home?
You can transfer the balance to an RRSP or RRIF tax-free without it affecting your regular RRSP contribution room, any time before the account must close; withdrawing the funds directly instead, for a non-qualifying purpose, is taxed as income in that year.
Does unused FHSA contribution room carry forward like TFSA room does?
Only partially — up to $8,000 of unused room can carry forward to the following year, unlike TFSA room, which has no such cap and simply keeps accumulating indefinitely.
Related Terms
RRSP (Registered Retirement Savings Plan)
An RRSP is a government-registered account where contributions are tax-deductible and investments grow tax-free until withdrawal.
TFSA (Tax-Free Savings Account)
A TFSA allows Canadian residents aged 18 and older to invest money and withdraw it at any time without paying tax on the growth.
HBP (Home Buyers' Plan)
The Home Buyers' Plan (HBP) allows first-time home buyers to withdraw up to $60,000 from their RRSP tax-free to purchase or build a qualifying home.