Saving for a first home can be a long and daunting process—but what if you could build your down payment faster, with powerful tax advantages? That’s exactly what Canada’s First Home Savings Account (FHSA) offers.
Launched in 2023, the FHSA is a registered savings plan designed to help first-time homebuyers reach their goals by combining the best features of an RRSP and a TFSA. If you’re planning to buy your first home, this account can give you a serious head start.
How Does FHSA Work?
Contributions to your FHSA are tax-deductible, just like RRSP contributions. The money inside the account grows tax-free, and when you’re ready to purchase a qualifying home, you can withdraw the funds tax-free—similar to a TFSA.
- Annual contribution limit: $8,000
- Lifetime limit: $40,000
- Funds must be used to purchase a qualifying first home within 15 years
Who’s Eligible?
- You must be a Canadian resident, age 18 or older
- You must be a first-time homebuyer (i.e., not owned a home in the current or previous four calendar years)
Can I Combine FHSA With Other Programs?
Yes! One of the best parts about the FHSA is that it can be used alongside other major federal programs such as:
- Home Buyers’ Plan (HBP): Withdraw up to $60,000 from your RRSP tax-free
- First-Time Home Buyers’ Tax Credit: Claim up to $1,500 in tax relief
Why Use the FHSA?
The FHSA is uniquely powerful because it gives you triple tax benefits:
- Contributions reduce your taxable income (like RRSPs)
- Investment growth is tax-sheltered (like RRSPs & TFSAs)
- Withdrawals for a home are tax-free (like TFSAs)
That’s a combination no other account currently offers. If you’re serious about buying your first home, opening an FHSA should be one of your first steps.
