FHSA explained (2026): how the First Home Savings Account works

The First Home Savings Account (FHSA) is a registered account for first-time home buyers in Canada. Contributions are tax-deductible, like an RRSP, and a qualifying withdrawal to buy your first home is tax-free, like a TFSA. You can contribute $8,000 a year, up to $40,000 over your lifetime, and carry forward up to $8,000 of unused room. If you never buy, the money can move to your RRSP tax-free.

Who can open an FHSA

You're eligible if you are:

• A Canadian resident.
• At least 18 (19 in provinces where that's the age of majority).
• A first-time home buyer: you (and your spouse or common-law partner) haven't lived in a home you owned at any time this year or in the previous four calendar years.

The 2026 limits

Room only starts once the account is open. If you open an FHSA in 2026 and don't contribute, you can contribute up to $16,000 in 2027. If you'd waited until 2027 to open it, you'd only have $8,000. That's why many people open one early, even with a small deposit.

How the tax savings work

The FHSA gives you two benefits that usually don't come together:

1. A tax deduction going in. Contributions reduce your taxable income, the same way RRSP contributions do. You can also carry the deduction forward to a later, higher-income year.
2. Tax-free coming out. A qualifying withdrawal for your first home isn't taxed at all, including the growth.

The difference adds up. Someone in a 30% tax bracket who contributes the full $40,000 could save roughly $12,000 in tax from the deductions alone, before counting any investment growth.

Using it to buy a home

To make a qualifying, tax-free withdrawal, you generally need:

• To still be a first-time buyer when you withdraw.
• A written agreement to buy or build a qualifying home in Canada before October 1 of the year after the withdrawal.
• To intend to live in it as your principal residence within a year of buying it.

You can combine the FHSA with the RRSP Home Buyers' Plan, which lets you withdraw up to $60,000 from your RRSP for the same home, and with your TFSA. Partners can each use their own FHSA for the same home.

If you don't buy a home

The FHSA has a time limit. It has to be closed by December 31 of the earliest of:

• The 15th anniversary of opening your first FHSA.
• The year you turn 71.
• The year after your first qualifying withdrawal.

If you don't buy, you can transfer the balance to your RRSP or RRIF tax-free, without using any RRSP room. In effect, you got extra retirement savings room. A withdrawal that isn't for a home, or a transfer to somewhere else, is taxed as income.

What to hold inside an FHSA

The FHSA can hold the same kinds of investments as a TFSA: cash, GICs, bonds, ETFs and stocks. What fits depends mostly on when you'll buy:

• Buying within one to three years: many people choose lower-risk holdings like high-interest savings ETFs or GICs, because a market drop right before closing could shrink the down payment.
• Buying in five years or more: some people hold a diversified mix with more stocks, accepting more ups and downs for more growth potential, and shift to lower-risk holdings as the date gets closer.

This is the same timeline thinking explained in How to start investing on your own. It isn't a recommendation for your situation.

FHSA vs TFSA vs RRSP for a home

For most eligible first-time buyers, the FHSA comes first for a home goal because it's the only one that's both deductible and never has to be paid back. For how the FHSA fits with your other accounts, see Investment accounts explained.

Common FHSA mistakes

• Waiting to open it. Room doesn't build until the account exists.
• Over-contributing by counting carry-forward you don't have yet. Check your room in CRA My Account.
• Taking a big investment risk on short-term money. The deadline to buy doesn't move when the market does.
• Forgetting the deduction. You don't have to claim it in the year you contribute. Saving it for a higher-income year can be worth more.