First Home Savings Account

What it is

The First Home Savings Account (FHSA) is a registered savings account introduced in April 2023 that combines the best of an RRSP and a TFSA: contributions are tax-deductible, growth is tax-sheltered, and qualifying withdrawals to buy or build a first home are entirely tax-free with no repayment required.

Who qualifies

• You are a Canadian resident, age 18+ (and at least the age of majority in your province).
• You are a "first-time home buyer" — you have not lived in a qualifying home that you or your spouse/common-law partner owned in the calendar year you open the FHSA or in the four preceding calendar years.
• You intend to purchase a qualifying home in Canada.

How much

• Annual contribution room: $8,000.
• Lifetime contribution limit: $40,000.
• Carry-forward: unused room rolls forward (max $8,000 carried into a year).
• Tax savings: every dollar contributed is deductible from taxable income at your marginal rate. At a 30% marginal rate, an $8,000 contribution returns $2,400 in tax savings.
• Maximum FHSA lifetime: 15 years from opening, or until age 71 — whichever comes first.

How to apply

1. Confirm eligibility (Canadian resident, 18+, first-time buyer test).
2. Open an FHSA at any participating financial institution (most major banks, credit unions, and online brokerages support it).
3. Contribute up to $8,000 in a calendar year.
4. Claim the deduction on your annual tax return.
5. When buying, request a qualifying withdrawal — the funds come out tax-free if the home meets the FHSA "qualifying home" definition.

Common mistakes

• Treating the FHSA like a TFSA and over-contributing — the 1%/month penalty applies above the lifetime cap.
• Closing the FHSA before purchasing without first transferring funds to an RRSP — you can move FHSA funds to an RRSP without using RRSP room, but only before the FHSA is closed.
• Not opening the account in the year you start saving — the $8,000 room only accrues after the FHSA is opened.
• Waiting to buy more than 15 years after opening — the FHSA has a hard expiry.

Estimate your tax savings

Annual contribution (max $8,000)Your marginal tax rate (%)

This year's tax savings

$0

Total at lifetime cap ($40k)

$12,000

Estimate only. Your actual marginal rate depends on your taxable income and province.