The First Home Savings Account, or FHSA, helps eligible Canadians save for their first home. Personal contributions may reduce taxable income, investments can grow tax-free inside the account, and qualifying withdrawals are not taxable.
These benefits make the FHSA valuable, but the account has eligibility requirements, contribution limits and withdrawal rules that are easy to misunderstand.
Here is how the FHSA works in 2026.
FHSA rules at a glance
| FHSA feature | 2026 rule |
|---|---|
| Annual participation room | $8,000 in the year you open your first FHSA |
| Lifetime limit | $40,000 |
| Maximum unused room carried forward | $8,000 |
| Tax deduction | Personal contributions are generally deductible |
| Investment growth | Tax-free while held inside the account |
| Qualifying home withdrawal | Tax-free, with no repayment required |
| Government matching contribution | None |
| Minimum FHSA holding period | None for a qualifying withdrawal |
| Maximum participation period | Generally 15 years, but it can end sooner |
| Home Buyers’ Plan limit | Up to $60,000 from an RRSP under current rules |
The $8,000 annual amount applies to your personal contributions and transfers from an RRSP combined. It is not a separate limit for each FHSA you own.
What is an FHSA?
The FHSA is a registered account introduced in 2023 to help first-time home buyers save for a qualifying home in Canada.
It combines two familiar tax benefits:
- Like an RRSP, eligible personal contributions may be deducted from your taxable income.
- Like a TFSA, a qualifying withdrawal and the investment growth included in that withdrawal are tax-free.
Unlike the Home Buyers’ Plan, an FHSA qualifying withdrawal does not have to be repaid.
The government does not match your FHSA contributions. The incentive comes from the potential tax deduction, tax-sheltered growth and tax-free qualifying withdrawal.
Who is eligible to open an FHSA?
According to the Canada Revenue Agency’s FHSA eligibility rules, you must meet all the following conditions when you open the account:
- You are a resident of Canada.
- You are at least 18 years old, or 19 if that is the legal age for entering into a contract in your province or territory.
- You are 71 or younger on December 31 of the year you open the account.
- You qualify as a first-time home buyer under the FHSA account-opening rules.
For this purpose, you generally must not have lived in a home that you owned or jointly owned as your principal residence during the current calendar year or the previous four calendar years.
If you have a spouse or common-law partner, you must also not have lived during that period in a home they owned or jointly owned as your principal residence.
That distinction matters. A spouse owning a property does not necessarily prevent you from opening an FHSA. What matters is whether you lived in that property as your principal residence during the relevant period.
When does FHSA contribution room begin?
Your FHSA participation room begins in the year you open your first FHSA. It does not begin automatically when you turn 18 or become eligible.
Your participation room is $8,000 in the year the first account is opened. Opening an account late in the year does not reduce that amount.
For example, if you open your first FHSA in November 2026, you can contribute or transfer a combined total of up to $8,000 in 2026.
However, opening the account also starts your maximum participation period. This means there is a trade-off:
- Opening sooner allows you to begin accumulating unused participation room.
- Waiting may preserve more of the 15-year period if buying a home remains a distant or uncertain goal.
Opening an FHSA early can make sense when you are eligible and reasonably expect to use it, but it is not automatically the right decision for everyone.
How much can you contribute?
The FHSA has two central limits:
- Annual participation room: normally $8,000
- Lifetime contribution and transfer limit: $40,000
The $40,000 lifetime limit applies to personal contributions and transfers from your RRSP combined.
Investment income and capital gains earned inside the FHSA do not use contribution room. Your account could therefore grow beyond $40,000 and the entire balance could potentially be withdrawn tax-free if you meet the qualifying-withdrawal conditions.
Carrying forward unused FHSA room
You can carry forward up to $8,000 of unused FHSA participation room after opening your first account.
This means your available room in a later year may reach $16,000: the new $8,000 annual amount plus as much as $8,000 carried forward.
Consider someone who opens an FHSA in 2026 and contributes $3,000:
- 2026 participation room: $8,000
- Amount contributed: $3,000
- Unused room: $5,000
- Potential 2027 room: $13,000
Unused participation room does not accumulate before you open your first FHSA.
You can confirm your available room through your CRA account or your latest notice of assessment. This is safer than relying only on your own calculation.
Are FHSA contributions tax-deductible?
Personal contributions are generally deductible from taxable income. You may claim the deduction for the year you made the contribution or save it for a future year.
For example, someone with relatively low income today may contribute now but wait to claim the deduction in a later year when their taxable income is higher.
The FHSA contribution period follows the calendar year, from January 1 through December 31. Unlike an RRSP contribution, a contribution made during the first 60 days of the following year cannot be deducted for the previous tax year.
The CRA explains the deduction rules in its guide to tax deductions for FHSA contributions.
You must also complete Schedule 15 when filing your tax return for the year you open your first FHSA, even if you did not contribute that year.
Can you transfer money from an RRSP to an FHSA?
You can make a direct transfer from an RRSP to an FHSA without immediately including the amount in your taxable income.
However, the transfer:
- Uses your available FHSA participation room
- Counts toward the $40,000 lifetime FHSA limit
- Does not create a new FHSA tax deduction
- Does not restore the RRSP contribution room previously used
The transfer must be completed directly between the registered accounts. Withdrawing money from your RRSP yourself and then contributing it to the FHSA can produce different tax consequences.
The CRA provides the details and required form in its guidance on transfers into an FHSA.
When cash is available, making a new FHSA contribution may be more valuable than transferring from an RRSP because the new contribution can provide an additional deduction. The best choice still depends on your cash flow, tax situation and home-buying timeline.
What happens if you contribute too much?
An excess FHSA amount is generally subject to a tax of 1% per month based on the highest excess amount during that month.
Opening multiple FHSAs does not multiply your contribution room. Your participation room applies across all your FHSAs.
Before contributing, check:
- Contributions already made during the year
- Direct transfers from your RRSP
- Contributions held at every FHSA provider
- Your room shown by the CRA
A qualifying withdrawal does not necessarily eliminate an existing excess amount. If you overcontribute, consult the CRA’s instructions or a qualified tax professional before trying to correct it.
How do qualifying FHSA withdrawals work?
If you meet all the conditions, you may withdraw some or all of your FHSA tax-free. The withdrawal does not need to be repaid.
The CRA’s qualifying-withdrawal rules require you to:
- Meet the first-time home buyer test that applies at the time of withdrawal
- Have a written agreement to buy or build a qualifying home in Canada
- Have an acquisition or construction-completion date before October 1 of the year following the withdrawal
- Make the withdrawal no more than 30 days after acquiring the home
- Remain a Canadian resident from your first qualifying withdrawal until you acquire the home, or until your death if earlier
- Occupy or intend to occupy the home as your principal residence within one year
- Submit Form RC725 to your FHSA issuer
The first-time home buyer test used for a withdrawal is slightly different from the test used when opening the account. At withdrawal, it generally looks at whether you lived in a home that you owned or jointly owned during the current calendar year before the withdrawal, excluding the 30 days immediately before it, or during the previous four calendar years.
If you do not meet all the conditions, the withdrawal may be taxable.
Is there a 90-day minimum holding period?
There is no general rule requiring FHSA contributions or RRSP-to-FHSA transfers to remain in the account for 90 days before a qualifying withdrawal.
The CRA specifically states that there is no minimum number of days that the money must remain in an FHSA before being used for a qualifying withdrawal.
The 90-day rule people sometimes associate with first-home savings relates to certain RRSP contributions and deductions when using the Home Buyers’ Plan. It is not a general FHSA holding requirement.
FHSA vs TFSA vs the Home Buyers’ Plan
Each option serves a different purpose.
| Feature | FHSA | TFSA | Home Buyers’ Plan |
|---|---|---|---|
| Contributions deductible | Generally yes | No | RRSP contributions may be deductible |
| Qualifying withdrawal taxable | No | No | No, if HBP conditions are met |
| Repayment required | No | No | Generally yes |
| Current withdrawal limit | Full FHSA balance | Full TFSA balance | Up to $60,000 per person |
| Withdrawn room restored | No | Yes, in the following calendar year | Not applicable in the same way |
| Limited to first-home purchase | Yes, for a tax-free qualifying withdrawal | No | Yes, subject to HBP rules |
The current Home Buyers’ Plan withdrawal limit is $60,000 per eligible participant.
You may use the FHSA and the Home Buyers’ Plan for the same qualifying home if you meet the conditions for both programs.
For people eligible for an FHSA, it will often be an attractive place to save because qualifying withdrawals require no repayment. Still, an emergency fund, employer pension matching, high-interest debt or other financial priorities can affect which account should receive money first.
For a broader comparison, see TFSA vs. RRSP: Which Savings Account Is Right for You?.
What should you hold inside an FHSA?
An FHSA is an account type, not an investment. Depending on the provider, it may hold cash, guaranteed investment certificates, bonds, mutual funds, exchange-traded funds and other qualified investments.
The appropriate choice depends heavily on when you expect to need the down payment.
Buying within a few years
If you expect to buy soon, protecting the down payment may matter more than maximizing long-term returns.
Cash, high-interest savings products, short-term GICs or other low-volatility investments may be appropriate. Check maturity dates before locking money into a GIC.
Buying much later
A longer timeline may support some exposure to stocks, provided you understand that markets can fall and that your home purchase may arrive during a downturn.
Your ability to accept investment risk and your ability to recover from a loss are different. The closer you get to buying, the more important it becomes to protect money you cannot afford to lose.
You can explore this distinction in How to Calculate Your True Investment Risk.
What if you do not buy a home?
Not buying a home does not necessarily mean losing the value of the FHSA.
You can generally transfer the FHSA directly to your own RRSP or RRIF without an immediate tax bill. When completed properly and when you do not have an excess FHSA amount, the transfer generally does not use your existing RRSP deduction room.
The money becomes subject to the usual RRSP or RRIF rules. A later withdrawal will generally be taxable.
Taking the money as cash instead normally produces a taxable withdrawal. The amount must be included in your income for that year.
When must an FHSA be closed?
Your maximum FHSA participation period ends on December 31 of the year in which the earliest of these events occurs:
- The 15th anniversary of opening your first FHSA
- The year you turn 71
- The year following your first qualifying withdrawal
Before the period ends, you should close all your FHSAs and either make an eligible direct transfer, withdraw the remaining property or otherwise follow your issuer’s instructions.
The 15-year period starts when you open the account, even if you wait several years before making your first contribution. The CRA provides examples in its guide to closing an FHSA.
A practical order for using an FHSA
If the account fits your circumstances, the following process can help:
- Confirm that you meet the eligibility requirements.
- Check your FHSA participation room through the CRA.
- Decide whether opening the account now fits your likely home-buying timeline.
- Choose a contribution amount that does not weaken your emergency fund.
- Select investments based on when you expect to buy.
- Keep records of contributions, transfers and deductions.
- Reassess the investment risk as the purchase date approaches.
- Confirm every qualifying-withdrawal condition before taking money out.
If you are still building your down payment plan, see How to Save for a Down Payment on a Home in Canada.
Frequently asked questions
Does the government match FHSA contributions?
No. There is no matching government contribution. The benefits come from potential tax deductions, tax-sheltered investment growth and tax-free qualifying withdrawals.
When did the FHSA start in Canada?
FHSAs became available in 2023.
Can I open an FHSA if my spouse owns a home?
It depends on where you lived. You generally cannot open an FHSA if, during the relevant period, you lived as your principal residence in a qualifying home owned or jointly owned by your spouse or common-law partner.
Your spouse owning a property that you did not live in as your principal residence does not, by itself, necessarily disqualify you. Review the complete CRA eligibility test before opening an account.
Can both partners use an FHSA to buy the same home?
Yes. Two eligible buyers may each make a qualifying withdrawal from their own FHSA for the same home, provided each person meets all the conditions.
Can I use an FHSA and the Home Buyers’ Plan together?
Yes. You may make a qualifying FHSA withdrawal and an HBP withdrawal for the same home if you satisfy the rules of both programs.
Do FHSA withdrawals have to be repaid?
A qualifying FHSA withdrawal does not have to be repaid. This is one of the main differences between the FHSA and the Home Buyers’ Plan.
Can I withdraw more than $40,000?
Potentially. The $40,000 limit applies to lifetime contributions and RRSP transfers into the FHSA. It does not limit investment growth. If your balance grows beyond $40,000, you may withdraw the full balance tax-free when all qualifying conditions are met.
Should everyone eligible open an FHSA immediately?
Not necessarily. Opening the account starts the maximum participation period, and different financial priorities may come first. The decision should reflect your expected home-buying timeline, cash flow, debt and other savings goals.
The bottom line
The FHSA offers eligible Canadians a useful combination: deductible personal contributions, tax-sheltered growth and tax-free qualifying withdrawals with no repayment requirement.
Its value depends on using it correctly. Contribution room begins only after the first account is opened, unused room has a limited carry-forward, RRSP transfers do not create another deduction, and withdrawals must meet every CRA condition to remain tax-free.
Before contributing or withdrawing, verify your available room and the current requirements through your CRA account. For decisions involving a large contribution, an unusual ownership history or an excess amount, consider consulting a qualified tax professional.
This article provides general information and does not constitute financial or tax advice. Tax rules and individual circumstances can change.