FHSA Mutual Funds: What to Buy in Canada's Best Tax Shelter (2026)

The First Home Savings Account launched in April 2023 and it's genuinely the best registered account Canada has ever created. Tax-deductible contributions like an RRSP. Tax-free withdrawals like a TFSA.

And you can use it alongside the Home Buyers' Plan. Here's what to put in it.

$8,000/year limit $40,000 lifetime Fund recommendations Updated 2026

FHSA Rules: The Quick Version

Who qualifies: Canadian residents aged 18-71 who haven't owned a home (or lived in a home owned by their spouse) in the current year or any of the previous four calendar years. You don't need to be a first-time buyer in the strictest sense — if you sold your home five years ago, you qualify again.

Contribution limits: $8,000 per year, $40,000 lifetime. You can carry forward up to $8,000 in unused room to the following year (but only after opening the account — contribution room doesn't accumulate before you open one).

Tax treatment: Contributions are tax-deductible (like RRSP). Growth is tax-free. Qualifying withdrawals for a home purchase are tax-free (like TFSA).

It's both. That's why it's absurdly good.

Open your FHSA now, even if you're not buying soon. The 15-year clock starts when you open the account. Contribution room doesn't accumulate until the account exists.

If you wait 3 years to open one, you've lost $24,000 in potential contribution room (you can carry forward one year, but not the other two). Open it, contribute $1, and start the clock. You can fill it up later.

The 15-year rule: Your FHSA must be closed by December 31 of the year that's 15 years after you opened it, or the year you turn 71 — whichever comes first. If you don't use it for a home purchase, you can transfer the balance to your RRSP (without affecting RRSP contribution room) or withdraw it as taxable income.

Which Funds to Buy — Based on Your Timeline

Your investment choice should depend on when you plan to buy a home. This isn't optional — it's the most important decision.

Buying In	Risk Level	Mutual Fund Options	ETF Alternative	Why
1-2 years	Very low	HISA or GIC in FHSA	CASH.TO, PSA	You cannot afford a 20% drop right before you need the money
3-5 years	Low-moderate	TD Cdn Bond Index e-Series (TDB909, 0.44% MER) BMO Conservative ETF Portfolio (0.70% MER)	XBAL (0.20%)	Some growth, limited downside
5-10 years	Moderate	TD e-Series balanced mix BMO Balanced ETF Portfolio (0.71% MER)	XBAL or XGRO (0.20%)	Enough time to recover from a downturn
10+ years	Moderate-high	TD e-Series equity mix BMO Growth ETF Portfolio (0.72% MER)	XEQT or VEQT (0.20-0.24%)	Long horizon means you can handle volatility
Might not buy	Moderate-high	Same as 10+ years	XEQT or VEQT	Will transfer to RRSP if unused — treat like retirement savings

The biggest mistake people make: Putting their 2-year home down payment in 100% equities inside an FHSA. If the market drops 30% right when you need the money, your $40,000 becomes $28,000 — and you can't wait for recovery because you're trying to buy a house.

Match your risk to your timeline. If buying soon, use a GIC or HISA.

Best Mutual Funds for Your FHSA by Bank

If you want to keep your FHSA at your existing bank, here are the lowest-cost mutual fund options.

Bank	Best FHSA Fund	MER	Type	Notes
TD	TD e-Series mix (TDB900/902/911/909)	0.28-0.47%	Index	Best bank MF option. Requires TD Direct Investing
RBC	RBC Canadian Index Fund (RBF556, Series D)	0.55%	Index	Acceptable. Requires RBC Direct Investing
CIBC	CIBC Canadian Index Fund (Premium Class)	0.55%	Index	Requires $50K min or Investor's Edge
BMO	BMO Balanced ETF Portfolio (Series D)	0.71%	Balanced	One-fund solution. Requires InvestorLine
Scotia	Scotia Canadian Index Fund (Series D)	0.68%	Index	Requires Scotia iTRADE

The cheapest FHSA option: Open a self-directed FHSA at Questrade or Wealthsimple Trade and buy an all-in-one ETF (XBAL at 0.20% or XEQT at 0.20%). No commissions, lowest MER.

Both platforms offer FHSA accounts. If you want hands-off investing, Wealthsimple's robo-advisor manages your FHSA for about 0.40% + ETF MER (≈0.60% all-in).

FHSA vs RRSP Home Buyers' Plan: Which Is Better?

Short answer: FHSA wins almost every time. But you can use both.

Feature	FHSA	RRSP Home Buyers' Plan (HBP)
Tax-deductible contributions	Yes	Yes
Tax-free withdrawal for home	Yes — permanently tax-free	No — must repay over 15 years
Maximum amount	$40,000	$60,000 (increased from $35K in 2024)
Repayment required	No	Yes — 1/15th per year or it becomes taxable income
Uses RRSP room	No — separate account	Yes — depletes your RRSP
Can use both?	Yes — $40K FHSA + $60K HBP = $100K for a home purchase

The HBP repayment trap: If you use the RRSP HBP and don't repay 1/15th of the withdrawal each year, that amount gets added to your taxable income. Many Canadians forget to make repayments — or can't afford them alongside a new mortgage. With the FHSA, you withdraw and it's done.

No repayment. No strings. That alone makes the FHSA superior for most people.

FHSA Power Move: Use It Even If You Don't Buy

Here's the part nobody talks about enough. Even if you never buy a home, the FHSA is still valuable.

At any point, you can transfer your FHSA balance to your RRSP without using RRSP contribution room. You got the tax deduction on the way in, and the transfer doesn't create any additional tax liability.

Think about it: you contribute $8,000/year and deduct it from your income. Over 5 years, that's $40,000 in deductions — saving you $12,000-$16,000 in taxes (depending on your bracket).

Then you transfer the balance to your RRSP and let it grow for retirement. Even if you never buy a home, you've effectively created $40,000 of bonus RRSP room.

The only catch: if you withdraw without buying a qualifying home, the withdrawal is taxable income (like an RRSP withdrawal). So always transfer to RRSP instead of withdrawing if you're not buying a home.

Can you contribute to both FHSA and RRSP? Yes. FHSA has its own $8,000/year limit, completely independent of your RRSP contribution room.

If you have the cash, max out both. If you have to choose, FHSA first — it's more flexible (can transfer to RRSP later) and the withdrawal for home purchase is permanently tax-free. Read our RRSP vs TFSA guide for prioritizing all registered accounts.

Where to Open Your FHSA

Every major bank and online brokerage now offers FHSA accounts. Your choice depends on how you want to invest:

Want mutual funds with auto-contributions? Open at your bank.

TD is best for mutual fund investors (e-Series at 0.28% MER). RBC, CIBC, BMO, and Scotia all work but cost more.

Want the cheapest ETF option? Open at Questrade (free ETF purchases) or Wealthsimple Trade (no commissions). Buy XBAL or XEQT depending on your timeline.

Want hands-off investing? Wealthsimple's managed FHSA invests in a diversified ETF portfolio for 0.40% management fee + ETF costs (≈0.60% all-in). Not the cheapest, but zero effort.

Want a HISA/GIC for short-term savings? EQ Bank and other online banks offer FHSA savings accounts with competitive interest rates. Good if you're buying within 1-2 years.