First Home Savings Account (FHSA): A Powerful Tool for First-Time Home Buyers in Canada
Buying a first home is one of the biggest financial milestones in life—and planning ahead can make a meaningful difference. The First Home Savings Account (FHSA) was introduced to help first-time buyers save faster and more efficiently by combining the best features of an RRSP and a TFSA.
We help clients across Quebec and Ontario understand how the FHSA works, how it fits with other savings plans, and how to use it strategically—while following all applicable rules set by Canada Revenue Agency and provincial regulators.
What Is an FHSA?
The FHSA is a registered plan created specifically to help first-time home buyers save for the purchase of a qualifying home in Canada.
Key advantages:
• Contributions are tax-deductible (like an RRSP)
• Investment growth is tax-free
• Withdrawals for a first home are tax-free (like a TFSA)
When used properly, the FHSA can significantly reduce the cost of buying your first home.
Who Is Considered a First-Time Home Buyer?
You are generally considered a first-time home buyer if:
• You are a Canadian resident
• You are at least 18 years old
• You did not own and live in a qualifying home in the current year or any of the previous four calendar years
Eligibility rules are specific, and we help confirm whether FHSA participation is appropriate before opening an account.
FHSA Contribution Rules
The FHSA has clear lifetime and annual limits:
• Annual contribution limit: $8,000
• Lifetime contribution limit: $40,000
• Unused contribution room carries forward
• Contributions are optional—no requirement to contribute every year
You can open an FHSA even if you are not ready to buy immediately, as long as you qualify.
Tax Benefits of the FHSA
Contributions
• Contributions are tax-deductible, similar to RRSP contributions
• Deductions can be claimed in the year of contribution or carried forward
Growth
• Investments grow tax-free inside the FHSA
Withdrawals
• Qualifying withdrawals for a first home are not taxed
• No repayment requirement (unlike the Home Buyers’ Plan)
This triple advantage makes the FHSA one of the most attractive savings tools available to first-time buyers.
What Can You Invest In Inside an FHSA?
An FHSA can hold a wide range of investments, including:
• Savings accounts
• GICs
• Mutual funds
• ETFs
• Bonds
• Balanced or growth portfolios
We help choose investments based on your timeline, risk tolerance, and home-buying goals.
Using FHSA Funds to Buy a Home
To make a qualifying withdrawal:
• The home must be a qualifying Canadian property
• The withdrawal must be used toward the purchase
• You must be a first-time buyer at the time of purchase
• Proper forms must be completed
Withdrawals can be made for the purchase or construction of a home and may be combined with other programs.
FHSA vs RRSP Home Buyers’ Plan (HBP)
| Feature | FHSA | RRSP (HBP) |
|---|---|---|
| Contribution deduction | Yes | Yes |
| Growth | Tax-free | Tax-deferred |
| Withdrawal for home | Tax-free | Must be repaid |
| Repayment required | No | Yes |
| Lifetime limit | $40,000 | $35,000 (HBP) |
Many first-time buyers use both the FHSA and RRSP Home Buyers’ Plan together for maximum benefit.
What Happens If You Don’t Buy a Home?
If you never purchase a qualifying home:
• FHSA funds can be transferred to an RRSP or RRIF tax-free
• No loss of contribution room
• No penalties if transferred correctly
This flexibility ensures that FHSA savings are never wasted.
FHSA and Other Savings Plans
The FHSA works best when coordinated with:
• TFSA (tax-free flexibility)
• RRSP (long-term retirement savings)
• GICs (capital protection for near-term buyers)
• Non-registered savings (additional flexibility)
We help structure contributions across all plans so savings remain efficient and balanced.
FHSA for Couples and Families
Each eligible individual can open their own FHSA, even if buying together.
• Couples may combine two FHSAs toward one home
• Each person has their own $40,000 lifetime limit
• Strategic planning can significantly increase purchasing power
Who Should Consider an FHSA?
The FHSA is ideal for:
• Young professionals planning to buy in the future
• Renters saving for their first home
• Couples preparing for joint home ownership
• Individuals expecting income growth
• Anyone eligible who wants to reduce taxes while saving
Even those unsure about timing often benefit from opening an FHSA early.
Our Role in FHSA Planning
As an independent advisory firm, we help clients:
• Confirm FHSA eligibility
• Decide when to open an FHSA
• Coordinate FHSA with RRSP and TFSA strategies
• Choose appropriate investments
• Plan contribution timing for tax efficiency
• Prepare for qualifying withdrawals
• Avoid costly mistakes or over-contributions
Our guidance is clear, compliant, and tailored to your home-buying goals.
Build Your Path to Home Ownership With Confidence
The First Home Savings Account is one of the most powerful tools ever introduced for Canadian first-time buyers. Used correctly, it can shorten the path to home ownership and reduce long-term costs.
If you’re thinking about buying your first home—or simply want to prepare smartly—the right strategy matters.
Book a consultation with us to see how an FHSA fits into your savings plan and home-buying journey.
