The FHSA is Canada's most powerful tool for first-time homebuyers — tax-deductible contributions AND tax-free withdrawals for your down payment. Here's everything you need to know.
The First Home Savings Account (FHSA) launched in April 2023. It's a registered account specifically for first-time homebuyers that combines the best features of both the TFSA and RRSP — contributions are tax-deductible (like RRSP), and withdrawals for a qualifying home purchase are completely tax-free (like TFSA).
Like an RRSP, FHSA contributions reduce your taxable income for the year. If you're in a 40% marginal tax bracket and contribute $8,000, you get a ~$3,200 tax refund. That refund can go back into the FHSA or your TFSA.
Like a TFSA, all investment growth inside your FHSA is completely tax-free. Capital gains, dividends, interest — none of it is taxable while inside the account.
When you buy your first qualifying home, you can withdraw the full FHSA balance — including all growth — completely tax-free. This is the key advantage over the RRSP Home Buyers Plan, which you have to repay.
Annual limit: $8,000 per year
Lifetime limit: $40,000 total
Carry-forward: Unused annual room carries forward — but only 1 year at a time. If you contribute $0 in 2024, you can contribute $16,000 in 2025 (not all accumulated room forever like TFSA).
When room starts: Only after you open an FHSA. Open it the moment you're eligible even if you can't contribute much yet — your annual room accumulates from that date.
The FHSA can remain open for a maximum of 15 years or until December 31 of the year you turn 71, whichever comes first. If you haven't bought a home by then, you can transfer the balance to your RRSP or RRIF without tax consequences (no RRSP room needed for this transfer). You don't lose the money — you just lose the "tax-free withdrawal" benefit.
The 1-year catch: To make a qualifying FHSA withdrawal, you must have had the FHSA open for at least one calendar year before you buy. So if you open it in November 2025 and buy a house in February 2026, you cannot make a qualifying withdrawal yet. Open your FHSA as early as possible — even with a token $100 — to start the clock.
All three accounts can be used toward a first home. Here's how they compare:
| Feature | FHSA | RRSP Home Buyers Plan | TFSA |
|---|---|---|---|
| Contribution tax deduction | Yes ✓ | Yes ✓ (when contributed to RRSP) | No |
| Tax-free growth | Yes ✓ | Yes ✓ (inside RRSP) | Yes ✓ |
| Tax-free home withdrawal | Yes ✓ | No — must repay over 15 years | Yes ✓ (always tax-free) |
| Maximum for home purchase | $40,000 (lifetime cap) | $60,000 (2024+ limit) | No cap (use all room) |
| Must repay to restore room | No | Yes — 15 years | No (room restores Jan 1) |
| Best combined with | RRSP HBP + TFSA | FHSA + TFSA | FHSA + RRSP HBP |
Power move: Use all three together. Contribute to FHSA ($40,000 max, tax-deductible), use RRSP Home Buyers Plan ($60,000 max), and pull tax-free from TFSA. A couple buying together could potentially combine $200,000+ toward a down payment from these three sources.
The right investment depends on how far away your home purchase is. The FHSA allows the same investments as TFSAs and RRSPs: ETFs, GICs, mutual funds, stocks, bonds.
Preserve capital. A 30% market drop right before your down payment is catastrophic. Options:
A blend approach makes sense. Growth assets for the first half of your timeline, gradually shifting to more conservative as the purchase date approaches:
If you're 10+ years from buying (or not sure you'll buy), the FHSA can hold growth assets. Remember: if you don't buy, the balance rolls into your RRSP penalty-free. So even if plans change, you won't lose the money — just the tax-free-withdrawal benefit.
That said, if your FHSA timeline is 10+ years, you may also want to consider whether the TFSA is better — it has no purchase requirement and room that accumulates faster.
Not all FHSAs are created equal. The account type is the same, but the investment options and fees differ.
Questrade FHSA: ETF purchases free, wide investment selection including GICs. Best for DIY investors wanting to hold ETFs or GICs inside the FHSA. Questrade review →
Wealthsimple FHSA: Available through Wealthsimple Invest (robo) or Wealthsimple Trade (DIY). Good app experience. Robo-advisor version auto-manages the portfolio. Wealthsimple review →
EQ Bank FHSA: Great for GICs and savings inside an FHSA. If you're within 2–3 years of buying and want guaranteed returns without market risk, EQ Bank's FHSA GIC rates are competitive (typically 3.50–4.50% on 1–2 year terms as of early 2026). No ETF investing — pure savings/GIC focus.
Big Bank FHSAs (RBC, TD, Scotiabank, etc.): Available at all major banks. If you're holding GICs: rates are usually lower than EQ Bank or online brokers. If you want their mutual funds or ETFs inside the FHSA: watch the MERs. TD Direct Investing's FHSA gives access to e-Series funds if you want low-cost mutual funds specifically.
Don't wait to open it: The #1 FHSA mistake is not opening the account until you're ready to contribute a large amount. Open it with $100 as soon as you're eligible — this starts your annual room accumulation and qualifies you for the one-year minimum to make a tax-free withdrawal. Room you don't use accumulates (up to 1 year carry-forward).
When you're ready to buy your first home, you'll need to submit a Form RC-720 (Request to Make a Qualifying Withdrawal from Your FHSA) to your financial institution. Key conditions:
You can make multiple withdrawals from the same FHSA for the same qualifying home purchase. Once you make a qualifying withdrawal, the FHSA must be closed by December 31 of the following year.
The RRSP and TFSA both play a role alongside your FHSA. Our guide breaks down the optimal account strategy for Canadians.
RRSP vs TFSA Guide Best TFSA InvestmentsNothing on this site is financial advice. FHSA rules, contribution limits, and CRA guidelines may change — always verify with CRA.gc.ca or a financial advisor before making decisions. This guide reflects rules as of March 2026. Some links on this site are affiliate links; we may earn a commission if you open an account, at no extra cost to you.