FHSA: What It Is, the Rules and Who Is Eligible

The FHSA (First Home Savings Account) is a registered account that lets first-time home buyers in Canada deduct their contributions and then withdraw the money, growth included, tax-free to buy a first home. This guide covers what an FHSA is, the CRA rules that decide who can open one, how much you can put in, and what happens if you never buy. It is general education, not financial advice.

Quick links: FHSA Contribution Limit 2026 · Best FHSA in Canada · Best Brokerage for FHSA · FHSA vs TFSA · How a Wealthsimple FHSA works. New to investing? See Canadian Investing for Beginners.

FHSA at a glance

Every FHSA holder gets $8,000 of room in the year the first account opens, and lifetime contributions stop at $40,000. With a full year of unused room carried forward, the most anyone can contribute in one year is $16,000.

What is an FHSA?

An FHSA is a registered account for saving toward a first home, where contributions are tax-deductible and qualifying home withdrawals are tax-free. The full name is First Home Savings Account.

The FHSA was proposed in the 2022 federal budget, and the CRA’s statistics page confirms accounts became available on April 1, 2023. Its defining feature: contributions are deductible like an RRSP, and qualifying withdrawals are tax-free like a TFSA, with no repayment. No other Canadian registered account gives both for the same money.

How does an FHSA work?

You open the account, contribute within your room, deduct the contributions, invest, and withdraw tax-free when you buy a qualifying first home. Step by step:

1. Open the account at a bank, credit union, brokerage or robo-advisor that offers FHSAs. The issuer asks for your social insurance number (SIN), your date of birth and any documents the issuer needs to confirm you qualify.
2. Contribute up to your room: $8,000 in the first year, and up to $16,000 in a later year if you carried room forward.
3. Deduct the contribution on your tax return, in the year you contribute or a future year.
4. Invest in cash, GICs, bonds, funds, ETFs or stocks.
5. Let it grow without tax on interest, dividends or gains inside the account.
6. Withdraw the balance tax-free for a qualifying first home, using Form RC725.
7. Nothing to repay. Unlike the RRSP Home Buyers’ Plan, the FHSA withdrawal is never paid back.

If you don’t buy a home, the balance can move directly to your RRSP with no immediate tax and generally no effect on your RRSP room (details below).

What are the FHSA rules?

The core FHSA rules are the room limits, the first-time buyer test, the deduction rules, the tax-free withdrawal conditions and the closing deadline. Here they are in one list, each checked against the CRA’s FHSA pages on September 29, 2026:

1. Annual room: $8,000 in the year you open your first FHSA. After that, room is $8,000 plus any carried-forward unused room, capped by the $40,000 lifetime limit minus what you've already contributed.
2. Room starts when you open: the carryforward in the year you open your first FHSA is $0, so room only starts building from the year you open an account. Years before you open an account add nothing.
3. Lifetime limit: $40,000 of contributions and RRSP transfers in, across every FHSA you hold. Investment growth does not count against it.
4. More than one account: allowed, but one participation room covers all of your FHSAs combined.
5. Deductions: contributions can be deducted in the year you contribute or a future year. Transfers in from your RRSP are not deductible (they still use FHSA room).
6. Over-contributions: an excess FHSA amount is taxed at 1% per month on the highest excess amount in each month until it is removed.
7. Investments: an FHSA can hold generally the same qualified investments allowed in an RRSP or TFSA.
8. First tax return: you file Schedule 15 with your tax return for the year you open your first FHSA, even with no contributions.
9. Closing deadline: the maximum participation period ends December 31 of the year of the earliest of: the 15th anniversary of opening your first FHSA, turning 71, or the year after your first qualifying withdrawal.
10. Non-qualifying withdrawals: any withdrawal that isn’t a qualifying home withdrawal is added to your income for the year and subject to withholding tax.

Who is eligible for an FHSA?

You can open an FHSA if you are a resident of Canada, 18 to 71, and a first-time home buyer, and you must meet every condition on the day you open it. The CRA’s conditions:

1. Residency: you are a resident of Canada.
2. Age: 18 or older (19 where that is the legal age to sign a contract) and 71 or younger on December 31 of the year you open it.
3. First-time home buyer: you did not live, as your principal residence, in a home you owned or jointly owned (in Canada or abroad) earlier in the current calendar year or in the previous 4 calendar years.
4. Spouse or partner’s home: you also can't have lived, as your principal residence, in a home your spouse or common-law partner owned in that same period. This applies only if you have a spouse or common-law partner when you open the account.

Two details trip people up. First, the home test looks at where you lived, not whose name is on a title: the CRA’s own example rules out someone living in a home owned by a common-law partner. Second, the test for opening an FHSA differs from the test for withdrawing: at withdrawal time, a spouse’s home ownership is not relevant.

You don’t need earned income to open or contribute to an FHSA. RRSP room, by contrast, is 18% of the previous year’s earned income, so students and people with little income can build FHSA room when they can’t build much RRSP room.

Can newcomers and non-residents open an FHSA?

Newcomers can open an FHSA once they are Canadian residents for tax purposes and meet the other conditions; non-residents cannot open one. The CRA’s opening conditions list residency, age and first-time-buyer status. Citizenship and permanent residence are not on that list.

Newcomers to Canada

• When residency starts: you become a resident for tax purposes once you have enough residential ties to Canada, which for most newcomers is the first day you live in Canada.
• You need a SIN: the issuer asks for your social insurance number (SIN), your date of birth and any documents the issuer needs to confirm you qualify.
• A home abroad counts: the first-time buyer test also counts a home outside Canada that would qualify if it were in Canada, so a home you owned and lived in outside Canada in the current year or the previous 4 calendar years makes you ineligible until that window passes.
• No catch-up room: FHSA room depends on when you open the account, not on how long you have lived in Canada. A newcomer who opens an FHSA gets the same $8,000 first-year room as anyone else.

Non-residents

• Opening: not possible, because you must be a resident of Canada on the day you open the account.
• Leaving Canada after opening: the CRA says you can keep participating in your FHSA as normal, with one exception: a qualifying home withdrawal is not allowed; the FHSA can stay open, but no tax-free home withdrawal while you are a non-resident.
• Taxable withdrawals: withholding tax is 25%, unless a tax treaty reduces it, and the issuer reports it on an NR4 slip.
• Moving back to buy: a qualifying withdrawal requires you to be a resident of Canada from your first qualifying withdrawal until you acquire the home.

If you are ready to open an account, the guide to how a Wealthsimple FHSA works covers its fees, withdrawals and transfers, and the complete Wealthsimple guide covers the other account types.

How much can you contribute to an FHSA?

You can contribute $8,000 in the year you open your first FHSA, and $40,000 over your lifetime. The two limits work together:

Annual room: $8,000 in the first year. In later years, $8,000 plus any carried-forward unused room, capped by the $40,000 lifetime limit minus what you've already contributed.

Carryforward: unused room carries forward, but only up to one year’s worth. That is why the most room anyone can have in a single year is $16,000. If you open an FHSA in 2026 and contribute nothing, you can put in up to $16,000 in 2027. Skip a second year and the extra room is gone.

Lifetime limit: $40,000 of contributions and RRSP transfers in. Growth inside the account doesn’t count, so an FHSA can hold more than $40,000 by the time you buy.

When room starts: only from the year you open an account. TFSA room builds from age 18 whether or not you have an account, and RRSP room builds from earned income. FHSA room does neither. The FHSA contribution limit guide has year-by-year examples.

How is the FHSA different from RRSPs and TFSAs?

The FHSA is the only one of the three that gives both a tax deduction going in and a tax-free withdrawal coming out, but only for a first home.

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The TFSA’s 2026 dollar limit is $7,000, and the RRSP’s is $33,810 or 18% of earned income, whichever is less. The FHSA’s $8,000 a year is the only one of the three that is both deductible and tax-free on the way out. The FHSA vs TFSA comparison covers the order people often fund them in.

The deduction is worth your marginal tax rate. As an illustration, an $8,000 contribution at a 30% marginal rate cuts tax by about $2,400.

What can you hold in an FHSA?

An FHSA can hold generally the same qualified investments allowed in an RRSP or TFSA: cash, GICs, bonds, mutual funds, ETFs and listed stocks. What you can buy depends on the type of FHSA your provider offers:

• Deposit FHSA at a bank or credit union: cash savings and GICs.
• Self-directed FHSA at a brokerage: ETFs, stocks and bonds you pick yourself. Broad ETFs such as XEQT (0.19% MER) and VFV (0.08% MER) are common examples.
• Managed FHSA at a robo-advisor: a portfolio built for you.

The time until you buy matters more than the product. Money you expect to spend within a couple of years is exposed to any market drop right before the purchase, while cash and GICs don’t swing in value. Money you won’t need for many years has more time to recover from a drop. Dividends from foreign stocks held in an FHSA could be subject to foreign withholding tax.

Where can you open an FHSA?

Most banks, credit unions, brokerages and robo-advisors in Canada offer FHSAs. A few examples, with the facts that differ between them:

• Wealthsimple FHSA : $0 commission on listed stocks and ETFs, account minimum: none, and fractional shares (yes — thousands of Canadian and US stocks and ETFs) for small monthly contributions. The Wealthsimple FHSA guide covers its withdrawal and transfer steps.
• Questrade FHSA : $0 to buy and sell Canadian and U.S.-listed stocks and ETFs.
• EQ Bank FHSA Savings Account : 1.50% interest on its TFSA, FHSA and RRSP savings accounts.
• Big bank FHSAs: RBC, TD, BMO, CIBC and Scotiabank and their brokerages offer FHSAs too.

The best FHSA in Canada guide compares providers side by side.

How do you withdraw from an FHSA to buy a home?

You give your FHSA issuer Form RC725 and must meet every qualifying-withdrawal condition; the withdrawal is then tax-free. The CRA’s conditions, checked September 29, 2026:

1. First-time buyer at withdrawal: you did not live in a home you owned in the current year before the withdrawal (except the 30 days just before it) or the previous 4 calendar years. A spouse’s home doesn’t count here.
2. Written agreement: you have a written agreement to buy or build the home, with a completion date before October 1 of the year after the withdrawal.
3. Timing: the withdrawal comes no more than 30 days after you acquire the home, so you can withdraw before closing or shortly after.
4. Residency: you remain a resident of Canada from your first qualifying withdrawal until you acquire the home.
5. Occupancy: you occupy, or intend to occupy, the home as your principal residence within one year after buying or building it.
6. Form: you use Form RC725, given to your FHSA issuer.

The home must be in Canada. After your first qualifying withdrawal, the account must be closed by December 31 of the following year, and new contributions after that withdrawal are not deductible.

What happens if you never buy a home?

You can transfer the FHSA directly to your RRSP or RRIF with Form RC721, with no immediate tax, and generally no effect on your unused RRSP deduction room (Form RC721).

• Deadline: before the end of your maximum participation period, which ends December 31 of the year of the earliest of: the 15th anniversary of opening your first FHSA, turning 71, or the year after your first qualifying withdrawal.
• Direct transfer only: if you withdraw the cash and deposit it yourself, the withdrawal is taxable and the deposit counts as a new RRSP contribution that uses RRSP room.
• Missing the deadline: any property still in the FHSA loses its status, and its fair market value on December 31 is added to your income.

Contributions are not wasted if plans change: after a direct transfer, the money follows the normal RRSP rules and stays tax-deferred until withdrawn.

Can you use the FHSA and the Home Buyers’ Plan together?

Yes. Using both for the same qualifying home is allowed, as long as you meet the conditions of each at the time of each withdrawal.

• FHSA: up to $40,000 of contributions plus growth, nothing to repay.
• RRSP Home Buyers’ Plan: up to $60,000 from your RRSPs, repaid over up to 15 years.

One buyer: $100,000 of contributions and RRSP withdrawals toward the same home. Two first-time buyers purchasing together: $200,000, since each person has their own FHSA and RRSP limits.

The RRSP Home Buyers’ Plan guide covers the repayment schedule.

Common FHSA mistakes

1. Waiting to open the account. Room only builds from the year you open an FHSA, so a late start means less total room by the time you buy.
2. Skipping Schedule 15. The CRA expects Schedule 15 with your tax return for the year you open your first FHSA, even with no contributions.
3. Over-contributing across two providers. The limit covers all of your FHSAs combined, and the excess is taxed at 1% per month on the highest excess amount in each month.
4. Withdrawing instead of transferring. Moving unused money to an RRSP only avoids tax and keeps your RRSP room intact when it is a direct transfer.
5. Missing the closing deadline. Property left in the FHSA after the maximum participation period is added to your income.
6. Assuming a spouse’s home always disqualifies you. It matters for opening an FHSA if you lived in it, but not for making the qualifying withdrawal.

How many Canadians have an FHSA?

According to the CRA, about 739,000 people had opened an FHSA by December 31, 2023, the first year accounts existed. That is the latest count on the CRA’s FHSA statistics page, which also puts the average balance for active holders at $3,899, well under the $8,000 of room each holder had that year.

Sources

• Canada Revenue Agency: First Home Savings Account: official rules and forms
• CRA: Opening your FHSAs: eligibility conditions
• CRA: Non-residents and FHSAs: what changes when you leave Canada
• CRA: Withdrawals and transfers out of your FHSAs: qualifying withdrawal conditions
• Department of Finance Canada: Design of the Tax-Free First Home Savings Account: original policy design

The verdict

For a Canadian resident who hasn’t lived in an owned home in the last 4 calendar years, the FHSA is the only account that is deductible going in and tax-free coming out. Its rules come down to a few numbers: $8,000 of room a year, $40,000 in total, and a closing deadline of 15 years or age 71.

• Likely to buy within 15 years: contributions become a tax-free down payment, and the Home Buyers’ Plan can add up to $60,000 more.
• Not sure you’ll buy: because room only builds after opening, an open account keeps the option alive, and unused money can move directly to an RRSP.
• Newcomers: eligibility starts with tax residency and a SIN; check the 4-year home test covers any home owned abroad.
• Leaving Canada: the account can stay open, but tax-free home withdrawals wait until you are a resident again.

Read next

• Best FHSA in Canada: where to open
• Wealthsimple FHSA guide: fees, withdrawals and transfers
• FHSA Contribution Limit: limits in detail
• FHSA vs TFSA: which to use first
• RRSP Home Buyers’ Plan: stack it with the FHSA
• How to Invest in Canada: what to hold in an FHSA
• TFSA Explained: the other major Canadian tax shelter
• RRSP Explained: for retirement savings