Happy 3rd FHSA anniversary: Here's what you should know by now

Nearly three years ago, Canadians gained a new addition to their home savings toolkit: the First Home Savings Account (FHSA). Since then, early users have learned how the FHSA works and how it can fit into an investment strategy, but there are still some misconceptions about the account.

In honour of the FHSA’s anniversary, we look at what the first three years have taught us, and what investors thinking about opening an FHSA should keep in mind.

A quick FHSA refresh

Saving up for a down payment on a home can take years, even decades, depending on a buyer’s income and location.¹ To help first-timers get over that hurdle sooner, the federal government launched a new registered account, the FHSA, on April 1, 2023. With it, eligible Canadians can contribute up to $8,000 per year, up to a lifetime maximum of $40,000, to put toward their first home purchase.²

The FHSA offers a blend of the tax benefits of two other registered accounts – the Tax-Free Savings Account (TFSA) and the Registered Retirement Savings Plan (RRSP), tailored to aspiring homeowners. Like with a TFSA, investment growth inside an FHSA is tax-free, and withdrawals are tax-free if they’re used to build or buy a qualifying home. And, as with an RRSP, contributions to an FHSA are tax-deductible. When you withdraw money from an FHSA to buy a home, you don’t have to pay it back. (If you use the RRSP Home Buyers’ Plan, you must repay the funds within 15 years.) Also, with an FHSA, the carryforward room for a given year can be up to $8,000.

The FHSA can hold a wide range of investments including cash, Guaranteed Investment Certificates (GICs), mutual funds, ETFs, bonds and stocks.³ And, it can stay open for up to 15 years (or until the end of the year you turn 71, whichever comes first). If the investor doesn’t end up buying a home, they can transfer the funds to an RRSP or a RRIF without impacting their contribution room.

Saving for your first home

How you save for your first house largely depends on your timeline and income, says Elorie Macchia, Senior Financial Planner at RBC. But you don’t have to choose just one account. “I usually suggest doing all three if you can,” she says.

Homebuyers can borrow up to $60,000 from their RRSP through the Home Buyer’s Plan, contribute up to $40,000 to an FHSA, and build further tax-free savings in a TFSA. Using all three, you could access $100,000-plus to put toward a down payment.

FHSA details to keep in mind

The FHSA has some nuances that investors should know about. For instance, while TFSA and RRSP contribution room accumulates annually even if no account is open, with an FHSA, you must open an account to start accumulating room.

The contribution deadlines are also different; the FHSA and TFSA contribution periods are January 1 to December 31 of the same year, while an RRSP also allows contributions in the first 60 days of a calendar year to be claimed as a deduction for the previous year.

When it comes to using the account, a common mistake Macchia sees young potential home buyers make is choosing investments that don’t match their timeline. She warns that they should be cautious about high-risk investments – like cryptocurrency – if they plan to buy a home in the near term, as savings could be quickly erased by a downturn and have little time to recover.

Another detail home buyers may not know that Macchia highlights: in order for an FHSA withdrawal to be tax-free, the money must be taken out of the account either (1) before the home is purchased, or (2) within 30 days of the purchase. (In both scenarios, this is subject to all qualifying conditions on Form R725 being met.)

Start early to maximize the benefits

Macchia says that since the FHSA’s inception, she’s seen a lot of young people opening accounts. According to data released by Statistics Canada in 2025, 484,320 tax filers said they made a contribution to an FHSA the first year it launched, and 57 per cent were between the ages of 25 and 34.⁴

But three years in, she wishes there were more education around the account. Understanding the ins and outs of the FHSA and knowing when it could be used instead of other accounts can be confusing – especially for new investors, Macchia says.

If there was more awareness and understanding of the rules, she says there would likely be greater uptake: “People come to me the year they want to buy a house, not five years prior. Then we don’t have the time to benefit fully from what the account has to offer.”

Overall, Macchia “highly recommends” the FHSA. If it fits your goals and lifestyle, she says, it can be a smart way for first-time buyers to accelerate their savings. “It just makes so much sense.”