This is a complete beginner guide to FHSA.

As some of you might know, I immigrated to Canada as a Permanent Resident (PR) in early 2023. As soon as I arrived in Canada, the first thing I understood from talking to my friends and relatives was that real estate is a good form of investment in Canada. 

The real estate market in Canada is booming and is projected to reach USD 7.82 trillion in 2023. The residential housing market dominates with a projected volume of USD 5.93 trillion in 2023. 

We, as immigrants, along with many long-time inhabitants of Canada, are planning to buy our first homes here. We are fortunate that the Canadian Government has established a savings and investment plan specifically tailored for first-time homebuyers.

In the 2022 Budget, the Government of Canada proposed the introduction of the First Home Savings Account (FHSA), designed specifically for first-time homebuyers in Canada. 

This guide will cover the features, eligibility, contribution limit, withdrawal rules, investment options, pros, and cons of the plan. We will also compare the FHSA with the other registered saving and investment accounts, TFSA and RRSP

FHSA Definition

The “tax-free first home savings account” or “first home savings account” or simply the FHSA is a registered savings plan specifically designed for Canadians aiming to buy their first home.


Keep reading.

FHSA Features in Summary

WithdrawalsTax free withdrawal when withdrawal is made for buying your first house
Growth of fundsTax deferred growth of funds
ContributionsContributions made to a FHSA provide tax rebate. The contributions are tax-deductible, meaning, the amount you contribute in a year is deducted from your taxable income for the year.
Ex: Let’s say you have a taxable income of $100,000 for the year. You contributed $8000 in the FHSA account. Your new net taxable income for the year would be ($100,000-$8000) $92,000 now.
Contribution LimitCAD 8,000 in one year and CAD 40,000 for the lifetime
EligibilityBe a resident of Canada.Be at least 18 years of age.Be a first time home buyer in Canada.
Good For?Those who are planning to buy their first house
FHSA features

FHSA Withdrawals

The First Home Savings Account (FHSA) is specifically designed to help first-time homebuyers in Canada. Since it is tailored for purchasing your first home in Canada, withdrawals for other purposes incur taxes.

It is crucial to exercise caution when making withdrawals from FHSA, as improper handling can result in taxes and penalties. What are these important considerations? Let’s take a look:

Withdrawals are exempt from taxation when:

  1. You are in Canada at the time of withdrawal.
  2. The withdrawal amount is less than or equal to CAD 40,000 (forty thousand).
  3. The withdrawal is made with the express purpose of purchasing your first home in Canada, where you plan to reside.

    This must be substantiated by presenting a signed agreement to either build or buy a home in Canada before October 1st of the year following the year of withdrawal.

    For instance, if you withdraw your FHSA funds by September 27th, 2023, you must provide your signed agreement to build or buy a house by October 1st, 2024. 

Should these conditions not be met, your FHSA withdrawals will be added to your taxable income for the year, and taxes will be imposed.

FHSA Eligibility

In order to open a FHSA account, you should meet the below conditions at the time of opening of the account.

  1. Age of 18 years or more at the time of opening of the account.
  2. Not more than 71 years of age on December 31 of the year of opening of the account.
  3. A resident of Canada.
  4. A first-time home buyer: This means you you did not, at any time in the current calendar year before the account is opened or at any time in the preceding four calendar years, live in a qualifying home (or what would be a qualifying home if located in Canada) as your principal place of residence that either:
    1. you owned or jointly owned
    2. your spouse or common-law partner (at the time the account is opened) owned or jointly owned

Source website

How to open FHSA-Top FHSA Providers

You can open an FHSA through a bank, credit union, a trust or an insurance company. The various investment options like stocks, mutual funds, bonds, etc. are advised by your FHSA issuer (bank, credit union, a trust or an insurance company).

Until now (at the time of writing this guide), the top FHSA providers or FHSA issuers are:

Royal Bank of CanadaRBC FHSA
QuestTradeQuestrade FHSA
Fidelity InvestmentsFidelity FHSA
National Bank of CanadaNBC FHSA
Equitable BankEQ FHSA
ScotiabankScotiabank FHSA
WealthsimpleFHSA Wealthsimple
Best FHSA issuers or providers in Canada

FHSA Contibution Limit 

FHSA Contribution Room or Contribtuion Limit in a year is $8,000.

Lifetime contribution limit of $40,000.

Beyond these set limits, taxes will be charged on the savings (1% on the highest excess amount maintained in a month and this is charged for all the months in which the FHSA amount exceeds the annual contribution limit).

Unused contribution room is carry-forward to the subsequent years.

For example, let’s say you were able to contribute $5,000 in the first year of opening your FHSA account. Then, $3,000 ($8,000 – $5,000) will be carried forward to the next year. If your budget allows, you can add $11,000 the next year.

However, in total over a lifetime, you cannot contribute more than $40,000 to your FHSA account.”

How to open an FHSA account?

The FHSA account can be opened at any bank, credit union or any financial institution which also issues the RRSP and TFSA accounts.

You can simply check with your bank or insurance provider if they allow FHSA account opening.

What happens if you do not buy a home from your FHSA funds?

In that case, either of the below can happen,

  1. Transfer to an RRSP: You can transfer the savings to an RRSP or RRIF account. The transfer is tax-free (without any potential taxes). However, as is with the case of an RRSP, withdrawals are taxed.
  2. Withdraw funds: You can withdraw the amount which will be taxed.

Points to be noted:

In order to make a qualifying withdrawal, you must have a written agreement of buying or building a home located in Canada before October 1 of the year following the year of withdrawal.


Both TFSA and RRSP are excellent and secure savings and investment accounts, but they serve different purposes. Both accounts enable you to invest and grow your funds in a tax-deferred manner.

If you have a short-term goal like buying a car, going on a holiday, or making a down payment on a house (although you should also consider checking FHSA for buying a house), then TFSA is your preferred plan. This is because withdrawals are tax-free.

On the other hand, RRSP is specifically designed for retirement savings. It is meant to help you save for your retirement.

WithdrawalsContributionsTax benefitsGrowth
RRSPTaxable Pre TaxYesTax-free
FHSATax-free if done for buying your first house in CanadaPre TaxYesTax-free


The FHSA savings plan is an excellent option to save and grow your funds to buy your first home. The withdrawals are tax free and the contributions also get deducted from your taxable income for the year.

So in a nutshell the FHSA offers the benefits of both an RRSP and TFSA.

However the total contribution limit for one Canadian resident in a lifetime is $40,000. You can, though, open a different account for your spouse.

Furthermore, if not home, the withdrawals you make from your FHSA account will be taxable.

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