17: First Home Savings Accounts (FHSAs)
Today, we’re talking about the First Home Savings Account, a relatively new account that was designed to make buying your first home a little easier (and to make it look like the government is doing something about affordability, even if that something isn’t doing much).
If you have extra money that you can afford to save for your first home, or even if you don’t own a home and never will, this episode is for you.
What is a First Home Savings Account
A First Home Savings Account is a registered plan. When a plan is registered, it means that there are rules for who can contribute, how much they can contribute, and how contributions and withdrawals are treated at tax time.
Other registered plans include Registered Retirement Savings Plans (RRSPs), Tax Free Savings Accounts (TFSAs), Locked In Retirement Accounts (LIRAs), Registered Education Savings Plans (RESPs), and Registered Disability Savings Plans (RDSPs).
The First Home Savings Account, or FHSA, lets you save for a home, deduct the amount you save from your income when you file your taxes (like an RRSP), grow the money inside the account without having to pay tax on the growth, and then withdraw all of it, tax free, when you buy your first home.
Can You Open a First Home Savings Account?
You can open an FHSA as soon as you turn 18 (or 19, if that’s the age of majority where you live), and before you turn 71. You have to be a resident of Canada, and you can’t have owned a home (all by yourself or with someone else) or have lived in a home your spouse or common-law partner owned anywhere in the world at any point this year or in the last four calendar years.
As of the recording of this episode, in January of 2026, you can open an FHSA if the last time you owned a home (or lived in a home your spouse or common law partner owned) was in 2021 - that’s the current year plus the previous four calendar years 2025, 2024, 2023, and 2022.
Note that nowhere in the rules about who can open an FHSA does it say “also, you have to plan to buy a home someday”. The only rules have to do with what you’re doing now and have done in the past, not the future.
Once you’ve opened your account, you need to report that you’ve opened it on your tax return for the year, even if you haven’t contributed to it yet.
How Much You Can Contribute to a First Home Savings Account (And When)
You can contribute up to $8,000 per year to your FHSA, and–unlike contributions to your RRSP–you have to do it by December 31st. There’s no FHSA season in the first 60 days of the year.
If you want to, you can transfer money from your RRSP to your FHSA. There are a couple of good reasons for doing this, but in general it’s more effective to contribute directly to your FHSA rather than transferring.
If you can’t save $8,000 in a year, the amount you don’t contribute is carried forward to the following year. So if you are eligible to open an FHSA this year, and don’t have any money to put into it, the room isn’t gone if you don’t use it by December 31st. On January 1st next year, you’ll have room to contribute the $8,000 you could have contributed last year, along with the $8,000 you’re allowed to contribute this year. The most you can contribute to your FHSA in your lifetime is $40,000.
The year after you open your FHSA account you’ll start to see how much more you can contribute to it, officially called your “participation room”, listed on your Notice of Assessment, alongside your RRSP contribution room.
The amount you contribute to your FHSA is deductible from your income, which means it reduces the amount of income you have to pay tax on. If you don’t need the deduction in the year you make the contribution, you can save it to use in some other year.
And this is the part that matters to those of you who don’t ever plan to buy a house: the $40,000 in FHSA contribution room is in addition to your RRSP room. If you don’t have much RRSP room but do have money you can save, and do have a high enough income that being able to reduce it for tax purposes makes sense, FHSA room is basically bonus RRSP room.
Time this well, though. You have to close your FHSA by either the 15th anniversary of opening it, the end of the year you turn 71, or the year after you make your first tax-free withdrawal, whichever comes first. To close the account, you’ll transfer the balance to your RRSP or RRIF, or you’ll withdraw it and pay tax on it.
How Much You Can Withdraw from a First Home Savings Account (And When)
You can actually withdraw as much as you want from your FHSA at any time. It’s your money, after all. But unless you follow the rules for qualifying withdrawals, the amount of money you take out of your FHSA will be added to your income for the year and taxed accordingly.
Here’s what you need to know to get your FHSA money out of the account tax-free:
You have to be a Canadian resident from the time you make your first withdrawal until you legally acquire the home.
You can’t have already bought a home more than 30 days before you withdraw the money.
You have to have a written agreement to buy or build the home, and the day you actually own the home (or that it’s completed) can’t be any later than October 1st of the year following the date you withdrew.
You have to live in the home (or intend to live in the home) as your principal place of residence within one year of buying or building it.
So if you withdraw from your FHSA today, you have to submit paperwork to the institution that holds your account, have a written agreement that the house will be complete and will be yours by October 1st, 2027, remain a resident of Canada from now until October 1st, 2027, and you have to move in by September 30th, 2028.
It doesn’t matter when you contributed to it during the year. You can contribute on Monday and withdraw on Tuesday, and still get all the benefits of the account. You can withdraw the money in small amounts or all at once, and, unlike the Home Buyer’s Plan, which is a tax-free withdrawal from your RRSP to buy a first home, money you withdraw from your FHSA doesn’t have to be repaid. Ever.
It can be intimidating and pretty scary to buy a home for the first time, not to mention pants-wettingly expensive. Squeezing every last tax-free dollar out of registered programs like the FHSA is worth doing.