FHSA Is Live: Everything You Need to Open an Account Today

Key takeaways

• FHSA accounts became available at participating institutions starting April 1, 2023
• Annual contribution limit is $8,000; lifetime limit is $40,000
• Contributions are deductible like an RRSP; qualifying withdrawals are tax-free like a TFSA
• Unused room carries forward — but only once the account is open
• You must be a first-time home buyer both when you open the account and when you make a qualifying withdrawal

The First Home Savings Account launched April 1, 2023, and it is one of the most generous tax-assisted savings vehicles ever introduced in Canada. For anyone under 40 who does not currently own a home, opening an FHSA is almost certainly worth doing — even if you cannot contribute immediately.

Who can open an FHSA

To open an FHSA you must be: a Canadian resident, at least 18 years old, and a first-time home buyer. The first-time buyer definition follows the same rule as the Home Buyers' Plan — you cannot have lived in a home that you or your spouse or common-law partner owned at any point in the current calendar year or the preceding four calendar years.

You can hold multiple FHSAs at different institutions, but your total contributions across all accounts cannot exceed $8,000 annually and $40,000 over your lifetime.

Why opening early matters

Unused annual FHSA room carries forward — but only from years in which the account was open. If you open an FHSA in 2023 but cannot contribute until 2024, you will have $16,000 of room available in 2024 ($8,000 from 2023 carried forward plus $8,000 for 2024). If you wait to open the account until 2024, you only have $8,000 of room in 2024.

This means every year you delay opening an account costs you $8,000 of permanently lost carry-forward room. The account can be opened with a zero or minimal balance at most financial institutions — there is no reason to delay.

The tax benefits

FHSA contributions are deductible from income in the year of contribution or any subsequent year — exactly like RRSP contributions. Unlike RRSP contributions, they do not require earned income and do not reduce your RRSP contribution room.

Investment growth inside the FHSA is tax-free. Qualifying withdrawals — to buy a first home — are not included in income. This is the key advantage over the RRSP Home Buyers' Plan, which requires repayment over 15 years.

If you never buy a home, the FHSA balance can be transferred to your RRSP or RRIF without affecting your RRSP contribution room. You do not get the deduction again on the transfer, but all future RRSP/RRIF mechanics apply.

Which institutions offer it

Major banks (RBC, TD, BMO, Scotiabank, CIBC), credit unions, and most discount brokerages (Questrade, Wealthsimple, etc.) began offering FHSAs in 2023. Not all launched on April 1 — some took several months to build the systems required. Check your institution's website or call them directly.

You can hold FHSAs as cash, GICs, mutual funds, ETFs, or individual securities — the same eligible investments as an RRSP. The contribution limit is the same regardless of what you invest in.

Qualifying withdrawal rules

To make a qualifying (tax-free) withdrawal from your FHSA, you must: be a first-time buyer at the time of withdrawal; have a written agreement to buy or build a qualifying home before October 1 of the following calendar year; and intend the home to be your principal place of residence within one year of acquiring it.

Unlike the RRSP Home Buyers' Plan, there is no repayment requirement for FHSA qualifying withdrawals. You receive the tax-free withdrawal permanently. If you sell the home later, your capital gains (if any) are handled separately.