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What is the First Home Savings Account (FHSA) in Canada?

Buying your first home is a huge milestone—but saving for it can feel like an uphill battle, especially in today’s real estate market. That’s where Canada’s First Home Savings Account (FHSA) comes in. Introduced in 2023, the FHSA is a new registered account designed to help first-time home buyers save for their dream home faster, with significant tax advantages.

How Does the FHSA Work?

The FHSA combines features of both the RRSP (Registered Retirement Savings Plan) and the TFSA (Tax-Free Savings Account). Contributions to the FHSA are tax-deductible, just like RRSP contributions. But when you withdraw funds to buy your first home, those withdrawals—along with any investment income earned—are completely tax-free, just like a TFSA.

This means you get a tax break when you put money in and when you take it out—something unique in Canada’s financial landscape.

Who Is Eligible?

To open an FHSA, you must:

  • Be a Canadian resident

  • Be at least 18 years old (or the age of majority in your province)

  • Be a first-time home buyer, which means you haven’t lived in a home you owned in the current or previous four calendar years

Contribution Limits

You can contribute up to $8,000 per year, with a lifetime maximum of $40,000. Unused room (up to the annual max) can be carried forward to future years, allowing you to catch up if you miss a year.

You can hold a variety of investments inside an FHSA, including mutual funds, ETFs, stocks, and GICs—so your savings can grow over time.

When and How to Use It

You can keep funds in your FHSA for up to 15 years. When you're ready to buy your first home, you can withdraw the funds tax-free—no need to pay them back, unlike the RRSP Home Buyers’ Plan (HBP). You can still use the HBP alongside your FHSA for even more purchasing power.

If you don’t end up buying a home, you can transfer the funds to your RRSP or RRIF tax-free, without affecting your RRSP contribution room.

Why It Matters

With housing affordability a growing challenge, the FHSA is a powerful new tool that helps level the playing field for first-time buyers. It rewards smart saving, offers tax efficiency, and gives you flexibility as your goals evolve.

Final Thoughts

If you’re planning to buy your first home in the next 5–15 years, opening an FHSA could be one of the best financial decisions you make. Talk to your bank, financial advisor, or accountant to get started—it’s a great step toward making home ownership in Canada a reality.

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