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First Home Savings Account (FHSA)
The First Home Savings Account (FHSA) is a type of registered savings plan introduced by the federal government in 2022. An FHSA is designed to help you save for your first home, tax-free and help you reach your vision of owning a home faster!
What is an FHSA?
An FHSA combines some of the features of an RRSP and TFSA. Eligible contributions will generally be tax-deductible, and when a qualifying withdrawal is made, the amount withdrawn, including any investment earnings, is not-taxable1.
How does an FHSA work?
- Annual contributions are capped at $8,000 up to a $40,000 lifetime contribution limit.
- A maximum of $8,000 unused contribution room can carry forward to the following year.
- The account can stay open for a maximum 15 years4, until the end of the year you turn 71, or until the end of the year after your first qualifying withdrawal.
- A qualifying withdrawal can be made tax-free to purchase your first home.
Why should I open an FHSA with TD?
FHSA vs. Other Plans
How is the FHSA different from the Home Buyers’ Plan?
With the current Home Buyers' Plan, Canadians can withdraw up to $60,000 from their RRSP subject to eligibility and conditions. The funds must be repaid to the RRSP over 15 years.
With an FHSA, eligible withdrawals do not need to be paid back.
Comparing FHSA to RRSP and TFSA
The FHSA is a registered plan that combines some of the features of an RRSP and a TFSA to help save towards your first home!
FHSA |
RRSP |
TFSA |
|
|---|---|---|---|
How does it help me buy a house? |
Invest up to a lifetime maximum of $40,000 in eligible contributions and use them for purchasing a qualifying home. |
Withdraw from your RRSP and use the amount towards your qualifying home purchase under the Home Buyers’ Plan.5 You can borrow up to $60,000 from your existing RRSP, but the borrowed funds must be paid back within 15 years. |
Invest your eligible contributions and use them for a home purchase (or anything else you want). Amounts withdrawn from a TFSA create additional TFSA contribution room beginning in the year following withdrawal. |
What are the contribution rules? |
$8,000 is the annual contribution limit. Carry-forward rules apply.6 $40,000 lifetime contribution limit during the Maximum Participation Period. |
The lesser of 18% of your previous year's earned income and the current fixed contribution limit $32,490 for 2025, subject to certain adjustments. You can carry forward any unused contribution room from previous years.7 No lifetime contribution limit. |
$7,000 is the annual contribution limit for 2025. You can carry forward unused contribution room from the year you turned 18 and were a Canadian resident for tax purposes. No lifetime contribution limit. |
Who's eligible to open an account? |
Canadian residents 18 years or older but not more than 71 years on December 31 of the year you open an FHSA, who have a valid Social Insurance Number (SIN) and are considered a first-time home buyer.2 |
Canadian residents who have a valid SIN up to the end of the year you turn 71, who have earned income and filed an income tax and benefit return. Some financial institutions may require customers to be the age of majority. |
Canadian residents 18 years or older2 who have a valid SIN. There is no upper age limit to hold a TFSA, unlike an FHSA or an RRSP. |
Will I get a tax deduction on eligible contributions? |
Eligible contributions are tax-deductible (except on transfers into your FHSA from your RRSP, although these transfers do use up FHSA contribution room). |
Eligible contributions are tax-deductible (except on transfers into your RRSP from your FHSA). |
No. Contributions are not tax-deductible. |
Key Advantages |
Funds in the account grow tax-free when a qualifying withdrawal is made, which could mean more money for a qualifying home purchase. You may also be able to transfer funds tax-deferred from your FHSA to an RRSP or RRIF in your name.8 |
Funds can be used towards the purchase of a qualifying home under the HBP. Investments can grow within the plan tax-deferred. |
Funds in the account grow tax-free and you can use the value of the account for anything you like, including towards the purchase of a home. |
Limitations |
An FHSA can only be held until December 31st of the year in which the earliest of the following occurs: the 15th anniversary of opening your first FHSA, the year you turn 71 or the year following your first qualifying withdrawal. Non-qualifying withdrawals (not made to purchase a qualifying home) are taxable income. |
Under the HBP, any RRSP withdrawal used to buy or build a qualifying home must be returned to your RRSP within 15 years and repayment generally begins in the second year after the year when you first withdrew funds. If you fail to repay the required amount within the required time frame, that amount will be considered as taxable income in that year. |
Contributions made to a TFSA are not tax-deductible. |
Frequently Asked Questions
- You can transfer funds from your RRSP to your FHSA on a tax-free basis. These transfers are subject to FHSA annual and lifetime contribution limits. Such transfers are not deductible from income for tax purposes.
- Transfers from an RRSP to an FHSA do not restore your RRSP contribution room.
- In-kind transfers will not be available for the FHSA at this time.
- Funds withdrawn from your FHSA that are not used to purchase a qualifying home are subject to income tax8.
- Alternatively, the balance in your FHSA not used to purchase a qualifying home could be transferred to an RRSP or RRIF (Registered Retirement Income Fund) on a non-taxable transfer basis, subject to applicable rules4.
- Transfers from your FHSA to your RRSP or RRIF do not impact your available RRSP contribution room.
- The funds transferred to an RRSP or RRIF will be taxed upon withdrawal.
- You must be a first-time homebuyer for the purposes of making a withdrawal9 and a resident of Canada at the time of the withdrawal for the acquisition of your qualifying home.
- A "qualifying home" is defined as a housing unit located in Canada. It also includes a share of the capital stock of a cooperative housing corporation, where the holder of the share is entitled to possession of a housing unit located in Canada.
- You must have a written agreement to buy or build a qualifying home located in Canada before October 1 of the year following the year of withdrawal.
- You must also intend to occupy the qualifying home as your principal place of residence within one year of buying or building it.
- You must not have acquired the qualifying home more than 30 days before making the withdrawal.
- Form RC725 - Request to Make a Qualifying Withdrawal from your FHSA must be completed and provided to the FHSA issuer.
- You can open a TD FHSA at your local branch with a TD Personal Banker, or online through TD Direct Investing.
- Make an appointment with a TD Personal Banker and they will help you open and setup your TD First Home Savings Account.
- Your TD Personal Banker can also provide financial advice based on your home buying goals so you can potentially own a home sooner.
Yes, you can carry forward unused contribution room, but it only begins to accumulate after you open your FHSA for the first time. Unused contribution room can be carried forward to future years, up to the annual limit of $8,000 and a lifetime maximum of $40,000, giving you flexibility to save for your first home at your own pace.
Yes, you can open multiple First Home Savings Accounts (FHSAs), but your total FHSA contribution room remains the same as if you had a single account. The 15-year maximum participation period is determined by the date you open your first FHSA, meaning all your accounts follow the same timeline for contributions and withdrawals.
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