The First Home Savings Account (FHSA) is the best tax deal available to a first-time buyer in Canada. Contributions are deductible like an RRSP, and money taken out to buy your first home is tax-free like a TFSA. You get both breaks on the same dollars.
Who can open one
To open an FHSA you must, at the time you open it:
- be a resident of Canada;
- be at least the age of majority in your province (18, or 19 in some provinces) and 71 or younger on December 31 of that year;
- be a first-time home buyer: you didn’t live, in this calendar year or the previous four, in a home that you owned or jointly owned as your principal residence, and (if you have a spouse or common-law partner) you didn’t live in a home they owned in that period.
The home you eventually buy must be in Canada. Each person opens their own account, so a couple can save in two.
Contribution limits and carry-forward
- $8,000 a year of participation room, starting in the year you open your first FHSA.
- $40,000 lifetime limit on contributions.
- Carry-forward: unused room from one year carries into the next, up to a maximum of $8,000. So the most you can contribute in a single year is $16,000.
- Room only starts building once you open an account. Nothing accumulates in the years before, so open one as soon as you’re eligible, even with a small deposit.
Contributing more than your room triggers a tax on the excess, so keep track of what you’ve put in across all your FHSAs. You can also transfer money from your RRSP into an FHSA; it uses FHSA room but gives you no new deduction.
The tax deduction
FHSA contributions reduce your taxable income, the same way RRSP contributions do. Two details are different from the RRSP:
- Contributions made in the first 60 days of a year can’t be deducted on the previous year’s return. They count for the year you make them.
- You don’t have to claim the deduction right away. Unused deductions can be carried forward to later years, even after the account is closed. If you expect a raise, saving the deduction for a higher-income year makes it worth more.
Investment growth inside the account (interest, dividends, capital gains) is not taxed while it stays in the FHSA.
Tax-free withdrawals: the conditions
A withdrawal is tax-free (a “qualifying withdrawal”) if, at the time you take it:
- you are still a first-time home buyer (living in the home you’ve just bought during the 30 days before the withdrawal doesn’t disqualify you);
- you have a written agreement to buy or build a qualifying home, with the purchase or completion before October 1 of the year after the withdrawal;
- you didn’t acquire the home more than 30 days before the withdrawal;
- you intend to live in it as your principal residence within one year of buying or building it;
- you are a resident of Canada, and you stay one until you buy the home.
You request the withdrawal with Form RC725, which you give to your FHSA issuer. A withdrawal that doesn’t qualify is added to your income and taxed.
If you don’t buy
An FHSA can stay open until December 31 of the year of the earliest of: the 15th anniversary of opening your first FHSA, your 71st birthday year, or the year after your first qualifying withdrawal. If you don’t buy a home, you can transfer the balance directly to your RRSP or RRIF with no tax and without using any RRSP contribution room. If you withdraw it yourself instead, it’s taxable. That makes the FHSA low-risk even if you’re not sure you’ll buy.
Combining the FHSA with the Home Buyers’ Plan
You can take a qualifying FHSA withdrawal and an RRSP Home Buyers’ Plan withdrawal for the same home, as long as you meet the conditions of each. With the HBP limit of $60,000, one person can put up to $100,000 plus their FHSA investment growth toward a first home, and a couple up to $200,000. Unlike the HBP, FHSA money never has to be paid back. See our Home Buyers’ Plan guide for how the two compare.
Worked example
Maya opens an FHSA in 2025 and contributes $2,000 that year. Her unused $6,000 carries forward, so in 2026 she can contribute $8,000 + $6,000 = $14,000. She contributes $8,000 in each of 2027, 2028 and 2029.
| Year | Room available | Contributed | Total contributed |
|---|---|---|---|
| 2025 | $8,000 | $2,000 | $2,000 |
| 2026 | $14,000 | $14,000 | $16,000 |
| 2027 | $8,000 | $8,000 | $24,000 |
| 2028 | $8,000 | $8,000 | $32,000 |
| 2029 | $8,000 | $8,000 | $40,000 |
She has reached the $40,000 lifetime limit. If her marginal tax rate is 30%, her deductions are worth about $12,000 in tax savings over those years. Say her investments grew to $44,000: in 2029 she signs an agreement to buy a condo and withdraws all $44,000 tax-free for her down payment. Add a $25,000 Home Buyers’ Plan withdrawal and she has $69,000 toward the purchase.
To see how a down payment of that size changes your mortgage and insurance premium, try the CMHC insurance calculator, and read our first-time home buyer checklist for the other programs you can stack.
Sources: CRA, First Home Savings Account; CRA, opening your FHSA; CRA, participating in your FHSAs; CRA, tax deductions for FHSA contributions; CRA, withdrawals and transfers; CRA, closing your FHSAs; CRA, Home Buyers’ Plan.