The First Home Savings Account (FHSA), explained

Last reviewed October 30, 2026

The FHSA is the most powerful savings tool available to first-time buyers in Canada. It combines the best features of an RRSP (a tax deduction when you contribute) and a TFSA (tax-free withdrawals), as long as the money goes toward a first home.

FHSA key facts

Annual limit

$8,000

Lifetime limit

$40,000

Carry-forward

Up to $8,000 of unused room into the next year, so a maximum of $16,000 in a year

Contributions

Tax-deductible (like an RRSP)

Qualifying withdrawals

Tax-free (like a TFSA)

Account lifespan

Up to 15 years from opening, or until the end of the year you turn 71, whichever comes first

If you don't buy

Transfer to an RRSP or RRIF tax-free, without using RRSP room

Source: Canada Revenue Agency, First Home Savings Account. Confirm current rules at canada.ca.

Who can open an FHSA?

Generally, you can open an FHSA if you are:

• A resident of Canada
• At least 18 (and no older than 71 at the end of the year)
• A first-time home buyer under the FHSA definition: generally, at any time in the year you open the account or the previous four calendar years, you didn't live in a home that you owned or jointly owned, or that your spouse or common-law partner owned.

Why it's so valuable

Say you contribute $8,000 in a year. You get an $8,000 tax deduction, so depending on your tax bracket you might get a refund of a couple of thousand dollars. The money can grow inside the account, invested in savings, GICs, ETFs or other qualified investments, with no tax on the growth. When you withdraw it to buy a qualifying first home, you pay no tax on the withdrawal.

An RRSP gives you the deduction but taxes withdrawals (or, through the Home Buyers' Plan, requires you to pay them back). A TFSA gives tax-free withdrawals but no deduction. The FHSA gives you both.

Making a qualifying withdrawal

To withdraw tax-free for a home, the general conditions are:

• You're a first-time home buyer at the time of the withdrawal.
• You have a written agreement to buy or build a qualifying home in Canada, generally entered into before October 1 of the year after the withdrawal.
• You intend to occupy the home as your principal residence within one year of buying or building it.

Your financial institution will have you complete the CRA form for a qualifying withdrawal. Plan the timing with your lawyer and lender so the funds are available for your deposit or closing.

FHSA timing tips for London buyers

• Deposit timing: in London, a deposit is usually due within a day or so of an accepted offer. If your FHSA is invested, keep enough in cash or cashable investments to access quickly, or plan to fund the deposit from other savings.
• Contribute before buying: contributions you make before you buy can still be deducted, even in the year you buy, as long as the rules are met. Check with your accountant on timing.
• Couples: each first-time-buyer spouse can open their own FHSA, which doubles the limits.

FHSA vs RRSP Home Buyers' Plan

Because FHSA withdrawals never need to be repaid, most people use the FHSA first and the Home Buyers' Plan as a top-up. See stacking the programs.

What if you don't buy?

If your plans change, you can transfer your FHSA savings into your RRSP or RRIF tax-free, and the transfer doesn't use your RRSP contribution room. Alternatively, you can withdraw the money as taxable income. Either way, the account must be closed by the end of its maximum participation period.

Common mistakes

• Over-contributing: there's a monthly penalty tax on excess contributions. Track your room, which is shown in CRA My Account.
• Assuming room accumulates before opening: it doesn't.
• Leaving it all in cash for years: fine for short timelines, but if you're five or more years out, consider whether investing makes sense for you. Talk to an advisor.
• Forgetting the occupancy rule: the home must be intended as your principal residence.