If you plan to buy your first home in the next few years, the First Home Savings Account (FHSA) is the most generous tool the federal government has handed buyers in a long time. Money goes in tax-deductible, like an RRSP, and comes out tax-free for a qualifying purchase, like a TFSA. You never pay it back.
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548 490 4577Who can open an FHSA?
You need to be a Canadian resident, at least 18, and no older than 71. You also need to be a first-time home buyer under the FHSA definition: you did not live in a home that you, or your spouse or common-law partner, owned at any time in the current year or the previous four calendar years. Someone who sold a home five or more years ago can qualify again.
How do the contribution limits work?
| Year | New room | Unused room carried in | Most you can contribute |
|---|---|---|---|
| Year 1: you open the account and put in $3,000 | $8,000 | $0 | $8,000 |
| Year 2 | $8,000 | $5,000 | $13,000 |
| Year 3, if you put nothing in during year 2 | $8,000 | $8,000 (the cap) | $16,000 |
Two details trip people up. First, the carry-forward is capped at $8,000, so you cannot let five years of room pile up and put it all in at once. Second, unlike an RRSP, there is no 60-day grace period: a contribution made in January or February counts for the year it is made, not the year before.
What does it actually save?
The deduction is worth your marginal tax rate. For someone earning around $70,000 in Ontario, that is roughly 30%, so each $8,000 contribution saves about $2,400 in tax. A couple who each fill their FHSA have $80,000 between them before any investment growth, and none of it is taxed on the way out.
You also don't have to claim the deduction in the year you contribute. If you expect a raise, you can carry it forward to a year when your tax rate is higher. An accountant can tell you which year is worth more for your situation.
Can I use the FHSA and the RRSP Home Buyers' Plan together?
Yes. You can use both for the same purchase. The Home Buyers' Plan lets you withdraw up to $60,000 from your RRSP, but that money has to be repaid over 15 years. An FHSA withdrawal never has to be repaid. For most buyers that makes the FHSA the first account to fill and the RRSP the second.
How the withdrawal works when you buy
You need a written agreement to buy or build a qualifying home in Canada before October 1 of the year after the withdrawal, and you must intend to live in it as your principal residence within a year of buying it. You make the withdrawal through your financial institution using CRA form RC725, and no tax is withheld.
Timing matters on a real purchase. Your deposit is usually due within 24 hours of an accepted offer, and an FHSA withdrawal can take several business days. Talk to your bank before you start writing offers, so the deposit comes from cash you can move quickly and the FHSA money is lined up for closing.
What happens if I never buy?
The account can stay open for up to 15 years, or until the end of the year you turn 71, whichever comes first. If you don't buy, you can transfer the balance to your RRSP or RRIF tax-free without using any RRSP room. That is why opening one is rarely a mistake for anyone who might buy: the worst case is extra retirement savings.
What an FHSA covers at local prices
LSTAR's August 2026 benchmark for a townhouse across London, St. Thomas, Middlesex and Elgin was $430,400. The 5% minimum down payment on that price is $21,520, and Ontario land transfer tax is $5,083 before the first-time buyer refund of up to $4,000. One fully funded FHSA covers both with room left for legal fees and moving.
Frequently asked questions
Can I open more than one FHSA?
You can, but your total contributions across all of them are still capped at $8,000 a year and $40,000 for life. Most people keep one.
What can I hold inside an FHSA?
The same kinds of investments as an RRSP or TFSA, including cash, GICs, ETFs and stocks. If you plan to buy within a year or two, many buyers keep the money in something that won't drop in value just before they need it.
Does my spouse owning a home affect my FHSA?
It can. If you lived in a home your spouse or common-law partner owned at any time in the current year or the previous four calendar years, you can't open an FHSA. Your bank or accountant can confirm your situation before you open the account.
