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The FHSA in Canada lets you put away $8,000 a year toward your first home, up to $40,000 in total, and deduct what you put in from your income. Take the money out to buy a qualifying first home and it comes out tax free. Nothing else in the registered family does both.
Who can open an FHSA in Canada?
You have to be a resident of Canada, at least 18, and a first-time home buyer. The CRA’s test for that last part is about where you’ve lived. You qualify if, in the part of this year before you open the account and in the four calendar years before it, you didn’t live in a home that you (or your spouse or common-law partner) owned.
So an owner who sold five years ago may qualify again. And a renter who bought an investment property but never lived in it may too. What counts is where you lived.
What are the FHSA limits?
| Item | Amount |
|---|---|
| Room in the first year you open | $8,000 |
| Room added each later year | $8,000 |
| Most you can carry forward | $8,000 |
| Most you can put in during one year | $16,000 (new room plus full carry-forward) |
| Lifetime limit | $40,000 |
| Account must close by | 15th year after opening, or the year you turn 71, whichever is first |
Room isn’t tied to your income. You get it by opening the account, and the year you open counts, even if you only open it in the last week of December. The CRA’s FHSA page states the $8,000 for the first year and links out to the rules on carrying room forward and closing.
How fast can you reach the $40,000?
At $8,000 a year, five years. That’s the plain version. Say Jordan in Halifax opens an account this December with $8,000. Next year he has $8,000 of new room, plus nothing carried forward because he used it all, so he can add another $8,000. Five Decembers in a row and he’s at the $40,000 ceiling, before any growth.
If he skips a year, the unused $8,000 carries forward, so he could put in $16,000 the following year. Skip two years in a row and the carry-forward stops at $8,000, so the second skipped year’s room is gone. That’s why many people open the account early, even with a few bucks, just to start the room clock.
How much tax does an FHSA save?
Your rate decides it, since the deduction comes off your income. We ran a full $8,000 contribution through the FHSA calculator for an Ontario resident who is opening the account this year. On $90,000 of taxable income the deduction saves $2,372. On $50,000 it saves $1,674. Same contribution, very different refund.
That’s a reason to think about timing. You don’t have to claim a deduction in the year you put the money in. Unclaimed contributions carry forward, so a person expecting a raise can wait and claim when the rate is higher. The marginal tax rate calculator shows what your next dollar is taxed at.
FHSA or RRSP for a first home?
You can use both, and many buyers do. The RRSP’s Home Buyers’ Plan lets you borrow up to $60,000 from your RRSP tax free, but you must pay it back over 15 years. The FHSA withdrawal never has to be repaid. On the other hand, the FHSA has its $40,000 ceiling and the RRSP doesn’t.
One order that works for many people: fill the FHSA first because nothing is repaid, then look at the RRSP and the RRSP calculator for the rest. It isn’t the right order for everyone, for example if you need the RRSP deduction at a much higher rate than the FHSA one would give you.
Is an FHSA better than a TFSA? For a home purchase within a few years, usually yes, because the deduction is extra. The TFSA is more flexible since you can spend the money on anything.
Mistakes that cost you
The first is putting in more than your room. The CRA charges 1% a month on the excess, so check the room figure before you top up. The second is assuming the money is free to use for any home. A withdrawal has to meet the CRA’s rules for a qualifying withdrawal, and one that doesn’t is taxed as income. A qualifying withdrawal needs a written agreement to buy or build a qualifying home before 1 October of the year after the withdrawal, and you must be a first-time buyer, so read the CRA’s FHSA withdrawals page before you buy.
The third is forgetting the closing deadline. If you never buy, the account still has to close by the 15th year or at 71. Unspent money can usually move to an RRSP, but check the current CRA rules before you rely on that.
Finally, don’t count your FHSA as your whole down payment without checking the minimum. The down payment calculator shows how much cash a given price needs.
Does the FHSA change your tax return?
A little. Your contributions show up as a deduction, and you decide how much to claim this year. Keep your own running tally of what you’ve put in and what you’ve claimed, and compare it with your CRA account before a top-up. Come tax time, keep the statements from your bank or credit union with the rest of your records.
Where we got these figures
The limits and deduction rules come from the Canada Revenue Agency‘s FHSA pages, and the eligibility wording from its page on registering an FHSA. The tax savings are our calculator’s results for Ontario, using 2026 rates. Your figure will differ with your province and income.
Frequently asked questions
How much can I put in an FHSA each year?
You get $8,000 of room a year and can carry forward up to $8,000 unused, so the most in one year is $16,000. The lifetime limit is $40,000.
Do I have to pay tax when I take money out?
Not if the withdrawal is a qualifying one to buy your first home. A withdrawal that doesn't qualify is added to your income.
Can I hold an FHSA and use the Home Buyers' Plan?
They are separate programs, and buyers often use both. The HBP lets you borrow up to $60,000 from your RRSP and repay it over 15 years.
What if I never buy a home?
The account has to close by the 15th year after you open it or the year you turn 71, whichever comes first. Check the CRA page on transfers out before you decide what to do with the balance.
Do I get room before I open the account?
No. Room starts when you open it, so opening early, even with a small deposit, starts the clock on your yearly $8,000.
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