First Home Savings Account: Your Guide to Tax-Free Down Payment Savings

The FHSA lets you save up to $40,000 tax-free for your first home. Here's how it works, how it stacks up against an RRSP, and whether you qualify.

What the FHSA Actually Is

The First Home Savings Account is a registered plan where you can save up to $40,000 for your first home purchase — and you won't pay tax on contributions, growth, or withdrawals.

You can put in up to $8,000 a year and deduct those contributions from your taxable income, the same way you would with an RRSP. Any interest or investment gains you earn inside the account grow tax-free. When you're ready to buy, you pull the money out tax-free, like a TFSA.

It's basically a tax-advantaged piggy bank designed to get you into your first place faster.

How It Compares to an RRSP

The FHSA and RRSP both let you deduct contributions from your taxable income. The big difference: you can pull money out of an FHSA for your first home without paying tax. With an RRSP, withdrawals are taxable unless you use the Home Buyers' Plan (more on that in a second).

RRSPs don't have a lifetime dollar cap — you can keep contributing as long as you have contribution room, up to 18% of your income or $30,780 annually (as of 2023). The FHSA has an $8,000 annual limit and a $40,000 lifetime maximum.

Think of the FHSA as a smaller, more focused savings tool with a cleaner exit strategy.

Stacking the FHSA with the Home Buyers' Plan

You can use the FHSA and the Home Buyers' Plan together. The HBP lets you borrow up to $35,000 from your RRSP to buy or build a home, then repay it over 15 years.

The FHSA doesn't require repayment — once you withdraw for a qualifying purchase, you're done. Combine the two and you're looking at $75,000 in tax-advantaged savings you can put toward your down payment.

It's a solid one-two punch if you've been building RRSP room and want to maximize what you can throw at your first place.

Who Qualifies

You need to be a Canadian resident and at least 18 years old. You can't have owned a home in the past four years, and neither can your spouse or common-law partner.

You'll need a written agreement to buy or build a qualifying home — either for yourself or for a related person with a disability. You're expected to move in and make it your primary residence within a year of buying.

There may be additional conditions depending on your situation, so it's worth confirming eligibility before you open an account.

What This Means for Your Down Payment

If you're saving for your first home, the FHSA gives you a way to shelter more money from tax than an RRSP alone, and it doesn't come with the repayment strings of the Home Buyers' Plan. When you pair the two, you can cut your tax bill and free up a bigger chunk of cash for your down payment.

That said, the FHSA is one tool in a longer process. It won't replace a mortgage pre-approval, a solid credit file, or a realistic budget for what you can carry month to month. Talk to a financial advisor to figure out how it fits into your overall plan.

The account launched in 2023, so if you're shopping now or in the next couple of years, it's worth opening one early to start the contribution clock.

Matt Broom-Hall · Founder & Mortgage Broker · Say hello →

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