Quick answer: A First Home Savings Account (FHSA) lets a first-time buyer save up to $8,000 a year, to a lifetime total of $40,000, for a down payment. Contributions are tax-deductible like an RRSP, and a qualifying withdrawal to buy your first home is tax-free like a TFSA. Two buyers can each have one, and you can use it with the RRSP Home Buyers’ Plan on the same home. On a $600,000 Ottawa home, a couple’s two full FHSAs cover more than double the $35,000 minimum down payment.
The FHSA is the one account where you get the tax deduction going in and pay no tax coming out. The catch is timing. Your contribution room only starts the year you open the account, so a buyer who waits until they’ve found a home has already lost room they can’t get back.
Who can open an FHSA?
You can open one if you’re a resident of Canada, at least 18, and no older than 71 on December 31 of the year you open it. You also have to be a first-time home buyer, which the CRA defines more generously than most people expect: you can’t have lived in a home you or your spouse or common-law partner owned, as your principal residence, at any time this year or in the previous four calendar years (CRA).
So if you sold a home and have been renting in Ottawa since before 2022, you may qualify again. That’s different from Ontario’s land transfer tax refund for first-time buyers, which requires that you’ve never owned a home anywhere in the world (Ontario). You can qualify for one and not the other.
How much can you put in?
Your room is $8,000 in the year you open your first FHSA. After that, you get $8,000 a year plus any unused room from the year before, but you can carry forward no more than $8,000. The lifetime limit is $40,000 (CRA).
That means the most you can ever put in during one year is $16,000, and only if you opened the account the year before and didn’t use it. Open an account in 2026 with nothing in it, and in 2027 you can contribute $16,000. Open it in 2027 instead, and you can contribute only $8,000 that year. Over-contributions are taxed at 1% a month on the excess, so keep track if you have accounts at more than one bank.
Only the account holder can claim the deduction, and the refund you get depends on your tax bracket.
How fast can a couple build a down payment with FHSAs?
Here’s an example for two first-time buyers who each open an FHSA in January 2026 and contribute the maximum every year. It leaves out investment growth and tax refunds, so it shows only what they put in.
| End of year | Each person’s total | Couple’s total |
|---|---|---|
| 2026 | $8,000 | $16,000 |
| 2027 | $16,000 | $32,000 |
| 2028 | $24,000 | $48,000 |
| 2029 | $32,000 | $64,000 |
| 2030 | $40,000 | $80,000 |
The minimum down payment on a $600,000 home is $35,000: 5% of the first $500,000 and 10% of the $100,000 above it (FCAC). This couple passes that in 2028. By 2030 their $80,000 is enough for more than 13% down on the same home, or 20% down on a $400,000 condo, which avoids mortgage default insurance altogether.
Can you use the FHSA and the Home Buyers’ Plan together?
Yes, for the same home, as long as you meet each plan’s conditions when you make each withdrawal (CRA). The Home Buyers’ Plan lets you take up to $60,000 from your RRSP (CRA), so with both, each buyer can bring up to $100,000 of contributions to the table, plus growth.
The difference is what happens after. Home Buyers’ Plan money has to go back into your RRSP over 15 years. A qualifying FHSA withdrawal never has to be repaid. If you’re choosing where to put your next dollar for a home in the next few years, the FHSA usually comes first.
What are the rules for a tax-free withdrawal?
To take the money out tax-free, you have to meet all of these at the time of the withdrawal (CRA):
- You’re still a first-time home buyer under the withdrawal test.
- You have a written agreement to buy or build the home, closing before October 1 of the year after the withdrawal.
- You didn’t acquire the home more than 30 days before the withdrawal.
- You plan to live in it as your principal residence within a year of buying it.
- You’re a resident of Canada.
You request it with Form RC725, given to your FHSA issuer. Miss a condition and the withdrawal is taxed as income. Plan this with your lawyer and your bank before closing, because the money has to be out of the account and with your lawyer in time.
When doesn’t this apply?
If you don’t buy, the FHSA still isn’t wasted. You can transfer it directly to your RRSP or RRIF with no tax at the time, and it doesn’t use your RRSP room (CRA). But the account has a time limit. It must be closed by December 31 of the year of the earliest of three dates: the 15th anniversary of opening your first FHSA, the year you turn 71, or the year after your first qualifying withdrawal (CRA). And if you’ve lived in a home you or your partner owned in the last four years, you can’t open one yet.
Common questions about the FHSA
How much can I put in an FHSA each year?
Up to $8,000 a year, to a lifetime limit of $40,000. Unused room carries forward, but only up to $8,000, so the most you can contribute in one year is $16,000.
Can I open an FHSA if I owned a home before?
Yes, if you haven’t lived in a home you or your spouse or common-law partner owned, as your principal residence, at any time this year or in the previous four calendar years.
Can a couple both have an FHSA?
Yes. Each first-time buyer can open their own FHSA, so a couple can save up to $80,000 in contributions between them and use both for the same home.
Can I use the FHSA and the RRSP Home Buyers’ Plan for the same home?
Yes, as long as you meet the conditions of each when you make each withdrawal. The Home Buyers’ Plan allows up to $60,000 from your RRSP, which must be repaid over 15 years. A qualifying FHSA withdrawal is never repaid.
What happens to my FHSA if I don’t buy a home?
You can transfer it directly to your RRSP or RRIF with no tax at the time and without using RRSP room. The account must be closed by the end of the year of its 15th anniversary, the year you turn 71, or the year after your first qualifying withdrawal, whichever is first.
When should I open an FHSA?
As early as you can, if you might buy a first home. Room only starts in the year you open the account, so opening one this year, even empty, gives you $16,000 of room next year.
What should you do next?
If you might buy in Ottawa in the next few years, open your FHSA this year, even with nothing in it, so the room starts building. Then let’s work out how your FHSA, any RRSP money and your income fit together, so you know your price range before you start looking. Book a 20-minute call with Joshua Tagg.
This is commentary, not advice. Rules and figures as of October 19, 2026, as published by the Canada Revenue Agency, and they can change. Talk to a tax professional about your own situation. All mortgages are subject to lender and insurer approval. Joshua Tagg, Indi Mortgage.
