First Home Savings Account
FHSA
A registered account that combines tax-deductible contributions with tax-free withdrawals for purchasing a first home in Canada.
What is an FHSA?
The First Home Savings Account (FHSA) is a registered savings account introduced in 2023 specifically to help first-time homebuyers save for a down payment. It combines the best features of both the RRSP and TFSA: contributions are tax-deductible (like an RRSP), and qualifying withdrawals for a home purchase are tax-free (like a TFSA).
Why It Matters for Newcomers
If you plan to buy your first home in Canada, the FHSA is one of the most tax-efficient ways to save for a down payment. As a newcomer who has never owned a home in Canada, you qualify as a first-time homebuyer, making you eligible to open an FHSA.
Key Details
You can contribute up to $8,000 per year, with a lifetime maximum of $40,000. Unused annual room can carry forward to the following year, up to a maximum of $8,000 carryforward. The account must be used within 15 years of opening or by age 71, whichever comes first. If not used for a home, funds can be transferred to an RRSP.
Quick Tip
Open an FHSA early even if you cannot contribute the full amount right away. The account must be open for at least one year before you can make a qualifying withdrawal, so starting the clock early gives you more flexibility when you are ready to buy.