What Is A First Home Savings Account?

Learn how the FHSA helps Canadians grow their down payment tax-free.

The FHSA is a registered savings plan that combines the best features of a TFSA and RRSP, allowing contributions to be tax-deductible (like an RRSP) and withdrawals for a first home to be tax-free (like a TFSA). 

Why was the FHSA Introduced? 

1. Rising home prices 

• Home prices in many Canadian cities have outpaced income growth, making it harder for first time buyers to save enough for a down payment. 

• The FHSA helps by offering a tax-advantaged way to save for a down payment. 

2. Support for first time buyers 

• First-time buyers often face challenges when it comes to purchasing a home, especially without access to intergenerational wealth and high rent costs. 

• The FHSA gives them a dedicated savings vehicle with built-in tax benefits. 

• Canada already offers the First Time Home Buyers’ Plan (HBP) through an RRSP to help with down payments, but it comes with repayment requirements. The FHSA goes a step further as it offers the same up-front tax deduction as an RRSP, plus tax-free withdrawals with no repayment required. 

3. Encouraging long term savings 

• By creating a tool specifically for home buying, the government incentivizes consistent, goal-oriented saving. 

Key features: 

Contribution limit: 
Up to $8,000 per year, with a lifetime limit of $40,000. 

• Tax deductible contributions: 
  Your contributions can be used to reduce your taxable income. 

• Tax free withdrawals for a first home: 
  When you use the funds to buy your first home, withdrawals are not taxed. 

• Investment growth: 
  You can hold a multitude of investments inside your FHSA, and all growth is tax-free if the funds are used for a qualifying home purchase. 

• Time limit: 
  You must use the account within 15 years of opening it or before you turn 71.  

• Eligibility: 
  You must be: 

• A Canadian resident,

• At least 18 years old,

• A first-time home-buyer or have not owned a home in the past 4 calendar years. 

Ready to get started? 

Saving for your first home takes planning and smart financial decisions. Whether you’re just getting going or looking to maximize your savings through the FHSA, HBP, or both- we’re here to help. 

Our team can help you: 

• Build a savings strategy that fits your timeline and budget. 

• Choose the right investment options for your FHSA. 

• Coordinate your plan with the HBP and other programs. 

• Stay on track with regular reviews and advice. 

Let’s build a plan that brings you one step closer to your front door. Book a call today or reach out to learn more. 

TL;DR:  

The FHSA is a tax-advantaged savings account designed to help Canadians save for their first home. It offers tax-deductible contributions (like an RRSP) and tax-free withdrawals when used for a qualifying home purchase (like a TFSA). 

Why it was introduced: 

• To combat rising home prices and ease down payment challenges. 

• Support first-time buyers who don’t have family help or face high rent. 

• Encourage long-term savings specifically for homeownership. 

Key features: 

• Contribute up to $8,000 per year, $40,000 lifetime. 

• Contributions reduce taxable income. 

• Investment growth and qualified withdrawals are tax-free. 

• Must use within 15 years of opening or before age 71. 

• For Canadian residents, 18+, who haven’t owned a home in the past 4 years. 

Why use it: 

If you're eligible and planning to buy a home, the FHSA is one of the most efficient ways to grow your down payment faster and tax-free. 

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