The First Home Savings Account (FHSA) is a registered account introduced by the federal government for the 2023 tax year. Contributions are deductible from income, growth inside the account is tax-sheltered, and qualifying withdrawals to purchase a first home are received tax-free. The annual contribution limit is $8,000 and the lifetime limit is $40,000. The calculator above projects the FHSA balance at the time of purchase and estimates the cumulative income tax refund generated by deductible contributions.
How much can an FHSA grow before a first home purchase?
A first-time buyer who opens an FHSA at age 28 and contributes $8,000 per year for five years accumulates $40,000 in contributions plus investment growth. At a 5% annual return, the account reaches approximately $46,250 at the end of the fifth year. At a 43% marginal tax rate, those contributions also generate approximately $17,200 in income tax refunds over the five years. Applied toward a purchase, both the balance and the refunds reduce the effective cost of the down payment.
How the FHSA works
Annual and lifetime contribution limits
The annual contribution limit is $8,000. Unused annual room carries forward to the next calendar year, with a maximum carry-forward of $8,000 per year. The maximum contribution in any one year is therefore $16,000 (the current-year limit plus one prior year’s unused room). The lifetime limit is $40,000 per person across all FHSA accounts combined. Once the lifetime limit is reached, no further contributions may be made even if prior-year annual room was unused.
The tax deduction for contributions
FHSA contributions are deductible in computing taxable income for the year of contribution, similar to RRSP contributions. Unlike RRSP contributions, FHSA contributions are not limited by earned income: the $8,000 annual limit applies regardless of income. The deduction may also be carried forward to a future year if not claimed in the year of contribution, which allows a contributor to defer the deduction to a higher-income year.
Tax-sheltered growth
Interest, dividends, and capital gains earned inside the FHSA are not subject to Canadian income tax while the account is open. The account can hold the same investments as a TFSA or RRSP: GICs, mutual funds, ETFs, publicly listed securities, and eligible bonds. Investment income earned inside the account does not affect TFSA or RRSP contribution room.
Qualifying withdrawals
To make a qualifying (tax-free) FHSA withdrawal, the account holder must be a first-time home buyer and a Canadian resident, must have a written agreement to buy or build a qualifying home before October 1 of the year after the withdrawal, and must intend to occupy the home as a principal residence within one year of purchase or construction. Withdrawals that meet these conditions are received tax-free, with no tax withheld at source and no income inclusion on the T1 return.
Carry-forward rule: one prior year only
If a contributor puts less than $8,000 into the FHSA in a given year, the unused room carries forward to the following year only, allowing a maximum of $16,000 in a single year. Unused room from two or more years prior does not accumulate: only one year of carry-forward is allowed at a time. An account holder who contributes nothing in 2023 and 2024 can contribute a maximum of $16,000 in 2025, not $24,000.
Verified against source
FHSA rules are in ITA section 146.6, added by Budget Implementation Act, 2022, No. 2 (S.C. 2022, c. 19). Annual limit, lifetime limit, and carry-forward rules: ITA 146.6(2). Qualifying withdrawal conditions: ITA 146.6(7) and (8). Transfer to RRSP or RRIF on non-qualifying use: ITA 146.6(9). CRA administrative guidance: Form RC691 (FHSA Contribution and Deduction Form) and CRA webpage “First Home Savings Account (FHSA).”
FHSA key limits and dates
| Parameter | Amount / Date |
|---|---|
| Annual contribution limit | $8,000 |
| Lifetime contribution limit | $40,000 |
| Maximum in one year (with full carry-forward) | $16,000 |
| Earliest year to open an FHSA | 2023 |
| Maximum account lifespan | 15 years from the year the account was first opened |
| Minimum age to open | 18 (or age of majority in the province, whichever is higher) |
| Maximum age at year-end | 71 |
| Qualifying home purchase deadline | Before October 1 of the year following the first withdrawal |
Worked example: five-year FHSA strategy, Ontario, 43% marginal rate
A 29-year-old Ontario resident opens an FHSA in January 2026 and contributes $8,000 per year for five years. Total contributions: $40,000 (the lifetime cap). At a 5% annual return, the projected balance at the end of year 5 is approximately $46,300. Each year’s contribution generates a deduction worth $8,000 times the marginal tax rate. At 43%, each contribution saves approximately $3,440 in tax, producing $17,200 in total refunds over five years. The combined effect: a $46,300 tax-free down payment contribution generated with a net out-of-pocket cost of $22,800 ($40,000 minus $17,200 in refunds).
Rules and edge cases
What happens if the home is never purchased
If the account holder does not purchase a qualifying home, the FHSA balance (contributions and growth) may be transferred to an RRSP or RRIF on a tax-deferred basis before the earlier of the end of the fifteenth year the account has been open or December 31 of the year the holder turns 71. The transfer does not require RRSP contribution room. If the balance is not transferred, it must be withdrawn and included in income in that year.
Overcontributions
Contributions exceeding the annual limit ($8,000 plus applicable carry-forward) are subject to a 1% per month tax on the excess amount under ITA Part XI.01, the same penalty that applies to TFSA overcontributions. The excess is tracked on Form RC691. The penalty tax continues until the excess is withdrawn or absorbed by new contribution room in the following year.
Combined use with the Home Buyers’ Plan
An FHSA qualifying withdrawal and a Home Buyers’ Plan (HBP) RRSP withdrawal may be used for the same home purchase, provided both sets of qualifying conditions are independently met. An HBP withdrawal must be repaid to the RRSP over 15 years. An FHSA qualifying withdrawal requires no repayment. Using both programs together allows a first-time buyer to access registered savings from two sources for the same purchase.
Definition of first-time home buyer
For FHSA purposes, a first-time home buyer is a person who did not own a qualifying home as a principal residence at any time during the four calendar years before the year of the withdrawal, or during the period from January 1 of the current year to 30 days before the withdrawal date. A person who previously owned a home but has not occupied it as a principal residence for this period qualifies as a first-time buyer again.
Non-resident holders
A qualifying withdrawal from an FHSA requires the holder to be a Canadian resident at the time of the withdrawal and at the time of the home purchase. A holder who becomes a non-resident after opening the account but before making a qualifying withdrawal cannot make a tax-free qualifying withdrawal. The account must be closed or the balance transferred to an RRSP within 60 days of becoming a non-resident; withholding tax applies on any amount withdrawn.
Frequently asked questions
- Who is eligible to open an FHSA?
- A Canadian resident who is at least 18 years old (or the age of majority in their province, if higher), has not yet turned 71 at the end of the year, and is a first-time home buyer as defined in ITA section 146.6(1). A first-time buyer is someone who has not occupied a qualifying home they owned as a principal residence at any point in the current year or the preceding four calendar years.
- What is the maximum FHSA contribution per year?
- The annual limit is $8,000. If unused room from the immediately preceding year is available, the maximum contribution in any one year is $16,000. Only one year of carry-forward accumulates: unused room from two or more prior years does not stack. The lifetime limit across all FHSA accounts is $40,000.
- Is an FHSA contribution tax-deductible?
- Yes. FHSA contributions are deductible from taxable income in the year of contribution or any future year. The deduction is not tied to earned income and does not consume RRSP contribution room. The deduction can be deferred to a higher-income year to maximize the tax benefit.
- Can FHSA withdrawals be used for any home purchase?
- No. Only qualifying withdrawals are tax-free. A qualifying withdrawal requires the holder to be a first-time buyer and a Canadian resident at the time of withdrawal and purchase, to have a signed agreement to buy or build a qualifying home, and to intend to occupy the home as a principal residence within one year of acquiring it.
- What happens to the FHSA if no home is purchased?
- The balance may be transferred to an RRSP or RRIF without affecting contribution room, provided the transfer occurs before the earlier of the 15th anniversary of opening the account or December 31 of the year the holder turns 71. If not transferred by that deadline, the full amount must be withdrawn and included in taxable income.
- Can FHSA funds be combined with the Home Buyers' Plan?
- Yes. Both programs may be used for the same home purchase if each set of qualifying conditions is met independently. The FHSA withdrawal requires no repayment. The HBP withdrawal must be repaid to an RRSP over 15 years starting the second year after the withdrawal. A first-time buyer can access both sources for the same transaction.
- What investments can be held inside an FHSA?
- Qualified investments are the same as those eligible for RRSPs and TFSAs: publicly listed shares, mutual funds, ETFs, GICs, eligible bonds, and certain other securities. Non-qualified investments are subject to a 50% penalty tax under ITA Part XI.01. Foreign content rules that previously limited RRSPs no longer apply to any registered account.
- Does the FHSA affect TFSA or RRSP contribution room?
- No. FHSA contributions do not reduce RRSP or TFSA room, and FHSA investment growth does not affect those limits. Transfers from a non-qualifying FHSA to an RRSP also do not reduce RRSP contribution room. The FHSA is independent of both programs.
- Is there a penalty for FHSA overcontributions?
- Yes. Contributions above the annual limit, including applicable carry-forward, are subject to a 1% per month tax on the excess under ITA Part XI.01. The penalty applies until the excess is withdrawn or new contribution room opens in the following year. The same rules and same form (RC691) that govern TFSA overcontribution penalties apply.
- Can an FHSA be opened jointly?
- No. An FHSA is an individual account held by one person. Two spouses or common-law partners who are both first-time buyers may each open their own FHSA and each access up to $40,000 in lifetime contributions and tax-free withdrawals for the same home purchase, for a combined maximum of $80,000 in registered savings applied to the purchase.