First Home Savings Account (FHSA)

If you've ever felt overwhelmed by the prospect of saving for a down payment or navigating the complexities of the real estate market, fear not – First Home Savings Accounts (FHSAs) are here to help! With an FHSA, you're not just saving for a house – you're investing in your future and building the foundation for your dream home. Are you ready to turn your dream of owning a home in Canada into a reality?

Gain a better understanding of how you can become a first-time homeowner in Canada with our guide on the First Home Savings Account!

What is a First Home Savings Home (FHSA)?

what is a first home saving's account?

A First Home Savings Account (FHSA) is a specialized financial tool designed to help individuals save for their first home. The FHSA offers first-time home buyers in Canada a registered plan that allows them to save to buy or build a qualifying first home tax-free within certain limitations.

Unlike regular savings accounts, FHSAs offer unique benefits tailored specifically for aspiring homeowners. With an FHSA, savers may enjoy tax advantages, potentially reducing their taxable income and increasing their savings.

FHSAs often offer higher interest rates than traditional savings accounts, allowing savers to grow their funds quickly. The primary goal of an FHSA is to assist first-time buyers in accumulating the necessary funds for a down payment, making homeownership more achievable and accessible. An FHSA serves as a dedicated savings tool, empowering individuals to take steps toward realizing their dreams of owning a home.

Please Note

If you opened an FHSA in 2023, you can claim up to 8,000 CAD in FHSA contributions by December 31, 2023. This is an FHSA deduction on your 2023 benefit return and income tax. As of yet, no information has been provided that this applies to 2024.

FHSA Contributions and Participation

Your annual FHSA participation room is the maximum amount you may contribute or transfer to your FHSAs without creating an excess FHSA amount. In general, FHSA participation rooms can be outlined as follows:

Types of FHSA Contributions and Withdrawals Amount (CAD)
Annual FHSA Participation Room 8,000
Lifetime FHSA Participation Room 40,000
Qualifying FHSA Withdrawals (to use for your first home) No Limit

If your transfers and contributions to your FHSA exceed the 8,000 CAD annual FHSA participation room limit, you may need to pay a tax on the excess amount of 1% per month until it is eliminated. Ensure that you file a return to report your excess FHSA amount and determine its tax payable amount.

To find your FHSA participation room, you must file your income tax and benefit return for the year you opened your FHSA. This notifies the Canadian government that you’ve opened an FHSA account, after which they’ll release a notice of assessment or reassessment containing the most up-to-date information about your FHSA participation room amount. You can also find your FHSA information on

FHSA Transfers

Generally, you can transfer property between your FHSAs or from your RRSPs to your FHSAs without receiving any tax consequences as long as this is a direct transfer. The amount you can transfer from your RRSPs to your FHSAs is limited to your annual FHSA participation room for the year.

To directly transfer from your RRSP to your FHSA, you must fill out an RC720, Transfer from your RRSP to your FHSA Form. This applies to transfers from a spousal or common-law partner RRSP to your FHSA. However, for transfers between your FHSAs, you must fill out Form RC721, Transfer from your FHSA to your FHSA, RRSP, or RRIF, and submit it to your financial institution.

Note that withdrawing and contributing your FHSA property to another of your FHSAs will not be considered a direct transaction. Furthermore, besides FHSAs and RRSPs, you may directly transfer property to your FHSAs from any other registered plans including:

  • Specified Pension Plan (SPP),
  • Pooled Registered Pension Plan (PRPP),
  • Registered Disability Savings Plan (RDSP),
  • Registered Education Savings Plan (RESP)
  • Registered Retirement Income Fund (RRIF), and
  • Tax-Free Savings Account (TFSA).

FHSA Life Events

Various life events can have an impact on your FHSA. This includes:

Breakdown or Dissolution of Your Marriage

Upon the dissolution of your marriage or common-law relationship, you must transfer property from your FHSAs to your former common-law partner or spouse. Generally speaking, you may not transfer property from your FHSAs to a former spouse or common-law partner without being subject to tax consequences.

FHSAs and Death

Any amounts withdrawn, contributed, or transferred from your deceased FHSAs before your death will be treated according to normal FHSA and RRSP regulations. However, no more contributions or transfers can be made to your FHSAs immediately after your death.

This also applies to transfers or contributions between deceased FHSA holder's FHSA accounts, RRSPs, or Registered Retirement Income Funds (RRIFS). Furthermore, distributions from a deceased holder’s FHSA can be made only on behalf of the deceased holder’s designated beneficiaries.

FHSA Investments

FHSA holders must limit their investments to qualified investments. Generally, the types of qualified investments permitted in an FHSA are the same as those in an RRSP and tax-free savings account (TFSA). Certain taxes may be due on some of your FHSA investments.

The type of FHSA investments permitted include:

  • Mutual funds,
  • Cash,
  • Guaranteed investment certificates (GIC),
  • Most securities listed on a designated stock exchange,
  • Certain shares of small business corporations, and
  • Canada savings bonds and provincial savings bonds.

You’ll receive advice on the types of FHSAs and qualified investments offered by your FHSA issuer.

FHSA Closures

Your maximum participation period starts the day you open your FHSA account and ends on the 31st of December of either the year of your 15th anniversary of opening your first FHSA, the day you turn 71, and the year after making your first qualifying withdrawal from FHSA.

To avoid being subject to unintended tax consequences, we urge you to close all your FHSAs before your maximum participation period ends. Furthermore, after the last FHSA holder has died, all FHSA must be closed.

Who is Eligible to Open an FHSA?

To be eligible to open a First Home Savings Account, you must meet all of the following qualifying conditions:

Age Condition for FHSA

You must either be 18 years of age or older (in certain provinces or territories, 19 years old, the age at which you can legally enter into contracts) or 71 years or younger as of the 31st of December of the year you opened your FHSA.

Residency Condition for FHSA

You must either be a permanent resident or a citizen of Canada.

Please Note

Should you become a non-resident Canadian after opening FHSA, you’ll still be allowed to participate in your FHSA, except that you won't be allowed to make a qualifying withdrawal to build or buy your first home in Canada.

First-Time Home Buyer Condition

You’ll be designated as a first-time home buyer in Canada with the intent to open an FHSA if you previously have not lived in a qualifying home in Canada as the main residence you owned or jointly owned in the present or previous four years. This applies to your spouse or common-law partner in Canada and individuals who don’t have a spouse or common-law partner.

How Can You Open an FHSA?

How Can You Open an FHSA?

You can open one or more FHSAs through an FHSA issuer, such as a:

  • Bank,
  • Credit union,
  • Trust, or
  • Insurance company.

Your FHSA issuer will advise you on the types of FHSAs and qualified investments they provide.

Follow the steps provided below to open FHSA:

Step 1: Contact Your FHSA Issuer

Begin by contacting the financial institution or entity that offers FHSA services. This could be a bank, credit union, or other authorized FHSA provider. They will guide you through the process and provide information on how to proceed.

Step 2: Provide Your FHSA Issuer With the Relevant Information to Register Your FHSA

Ensure you provide your FHSA issuer with all the documents and information needed to register your FHSA. This includes your Social Insurance Number (SIN), date of birth (DOB), and any relevant documents that can certify that you’re a qualifying individual. If you provide incorrect information to your issuer, your FHSA registration process may be revoked from the date it was initiated.

Step 3: Choose a Type of FHSA

There are three types of FHSAs to choose from. This includes a:

Depository FHSA

A depository FHSA is an account (opened in a Canadian financial institution) that holds term deposits, money, or guaranteed investment certificates (GICs).

Trusteed FHSA

Trusteed FHSA’s trusts (with trust companies as a trustee) that hold qualified investments, including term deposits, GICs, money, mutual funds, government and corporate bonds and securities listed on Canada’s designated stock exchanges.

Insured FHSAs

An insured FHSA is an annuity contract received from a licensed annuity provider in Canada. You can also open up a self-directed FHSA to manage and build your investment portfolio by selling and buying different types of qualified investments in Canada.

Step 4: Open Your FHSA

Once you've supplied the information and met any requirements set by your FHSA issuer, you can open your account. This typically involves completing an application or enrollment form and agreeing to the terms and conditions of the FHSA agreement.

Ensure you file your income tax and benefit return for the year you opened your first FHSA. This notifies the Canadian government that you opened an account, even if you did not contribute funds to your FHSAs or transferred property from your Registered Retirement Savings Plan (RRSP) to your FHSA in the same year.

Benefits of Opening an FHSA

Benefits of an FHSA

Many benefits come with opening an FHSA savings account. This includes:

Easy Path to Saving for Home Ownership

One of the primary benefits of opening an FHSA is the easy path it provides to saving for homeownership. Unlike traditional savings accounts, FHSAs are designed to help individuals accumulate the funds needed for a down payment on their first home.

By setting up automatic contributions to your FHSA, you can establish a disciplined savings habit and steadily build your savings over time. This structured approach makes tracking your progress toward your homeownership goals easier. It ensures you're consistently striving toward achieving them.

Find out more about buying a house in Canada.

Access to Flexible Investments

Besides providing a dedicated savings vehicle for homeownership, FHSAs also offer access to various flexible investment options. Depending on the financial institution or provider offering the FHSA, you may have the opportunity to invest your savings in various assets, including stocks, bonds, mutual funds, and exchange-traded funds (ETFs).

These investment options allow you to earn higher returns on your savings than you would with a traditional savings account, helping you grow your down payment fund more quickly and efficiently.

Learn about Canada’s top 5 cities to invest in.

Receive Personalized Advice

Another advantage of opening an FHSA is receiving personalized advice and guidance from financial professionals. Many FHSA providers offer access to financial advisors who can help you develop a customized savings plan tailored to your unique financial situation and goals.

Whether you're just starting to save for your first home or nearing your target down payment amount, a financial advisor can offer valuable insights and recommendations to help you maximize your savings potential and achieve your homeownership goals.

Planning For Your Mortgage

In addition to helping you save for a down payment, opening an FHSA can also assist you in planning for your mortgage. By accumulating a significant portion of your down payment in your FHSA, you may be able to qualify for a smaller mortgage loan, reducing your monthly mortgage payments and potentially saving you thousands of dollars in interest over the life of the loan. Additionally, having a sizable down payment can make you a more attractive borrower to lenders, increasing your chances of securing a favorable mortgage rate and loan terms.

Learn about buying a home in Canada as a non-Canadian.

Now that you’ve gained a broader understanding of First Home Savings Account (FHSA), you can begin the process of planning your Canadian homeownership journey with the guidance of our Regulated Canadian Immigration Consulted (RCIC).


How Do I Claim The Tax Benefits Associated With an FHSA?

To claim the tax benefits associated with an FHSA, simply report your contributions on your annual tax return and provide any necessary documentation to support your claim. Consult a tax advisor or financial professional for personalized guidance on maximizing your tax benefits.

Find out more about Canada’s taxation system.

Is The FHSA Only Good if You Buy a Home in Canada?

The FHSA is specifically aimed at first-time homebuyers in Canada. Eligibility criteria must be met, such as being a first-time homebuyer and residing in Canada at the time of withdrawal. Therefore, the FHSA is only available to those buying their first home in Canada.

Can I Combine FHSA and Home Buyers' Plan (HBP) With my Spouse?

You can combine your FHSA and Home Buyers' Plan (HBP) contributions with your spouse to increase your total savings for a home purchase. The HBP allows first-time homebuyers to withdraw funds from their RRSPs (Registered Retirement Savings Plans) to purchase a home, while an FHSA offers additional savings and tax benefits.