First Home Savings Account (FHSA) Rules: Eligibility, Limits and Withdrawals

FHSA rules at a glance

Every rule here comes from the CRA's First Home Savings Account pages and is explained below.

Who is eligible for an FHSA?

You can open an FHSA if, on the day you open it, you meet every one of these conditions:

• Age: you are 18 or older, and 71 or younger on December 31 of the year you open the account. In the provinces and territories where the legal age to sign a contract is 19, you have to be 19, because opening an FHSA is a contract.

• Residency: you are a resident of Canada. The test is residency, not citizenship.

• First-time home buyer: at no time in the current calendar year or the previous four calendar years did you live, as your principal residence, in a home you owned or jointly owned, in Canada or abroad.

• Spouse or common-law partner: if you have one when you open the account, you also did not live, during that same period, in a home they owned or jointly owned as your principal residence.

The test counts calendar years. If you last lived in a home you owned in 2023, you can open an FHSA from January 1, 2028. Living in a home your spouse or common-law partner owns rules you out, even if your name is not on the title. Owning a property you have never lived in, such as a rental, does not by itself.

When did the FHSA start, and when can you open one?

FHSAs have been available since April 1, 2023. You can open one at any time of year, and the first year always gives the full $8,000, even if you open in December. Room does not build up from 2023, though. Unlike TFSA room, it starts only in the year you open your first FHSA.

That makes it worth opening an account early, even with $0 in it: an FHSA opened in 2026 with nothing contributed gives you $16,000 of room in 2027. The 15-year clock also starts when you open, which only matters if you expect to take longer than that to buy. File Schedule 15 with your tax return for the year you open your first FHSA, even with no contributions, so the CRA knows the account exists.

FHSA contribution limits

The limits are $8,000 a year and $40,000 over your lifetime; the CRA calls the yearly amount your participation room. They cover all your FHSAs together, and contributions and RRSP transfers combined: a $5,000 contribution plus a $3,000 RRSP transfer uses the full $8,000. Investment growth does not count, so an $8,000 contribution that grows to $8,600 is not an over-contribution. Each limit year runs from January 1 to December 31.

Once the CRA has assessed your return for the year you opened your first FHSA, your room appears on your notice of assessment, on Form T1028 and in your CRA account. To see how contributions, refunds and growth add up over several years, try the FHSA contribution planner.

FHSA carry-forward rules

Unused room carries forward (or carries over) to the next year, but only up to $8,000, so the most you can normally contribute in one year is $16,000. Unused room above that cap does not carry into the next year, but it is not lost from your $40,000 lifetime limit; reaching the limit just takes longer. Carry-forward begins only once you have opened your first FHSA. In this example, the account is opened in 2026 with nothing in it, and the first contribution is made in 2027:

In 2028 this saver left $9,000 unused ($14,000 minus $5,000), but only $8,000 carried into 2029. By the end of 2030 the total put in is $39,000, so the room for 2031 is only the $1,000 left under the lifetime limit. In a less common case, a taxable withdrawal can add room back (the CRA calls it re-participation room); your CRA account shows it.

When can you deduct FHSA contributions?

You can deduct a contribution in the year you make it or in any later year, and amounts you have not deducted carry forward, even after the account is closed. Saving the deduction for a year with a higher income can mean a bigger refund: at a combined marginal tax rate of 30%, an $8,000 deduction cuts your tax by $2,400; at 40%, by $3,200.

• There is no 60-day rule. Unlike RRSP contributions, FHSA contributions made in the first 60 days of a year cannot be deducted for the previous year. A contribution made in February 2027 goes on your 2027 return or a later one.

• Transfers from an RRSP are not deductible.

• Contributions made after your first qualifying withdrawal are not deductible in any year.

• The most you can deduct over your lifetime is $40,000, minus any RRSP transfers.

Investment losses inside the account, account fees and interest on money borrowed to contribute are not deductible.

Is there a minimum holding period for FHSA contributions?

No. The CRA states that there is no minimum number of days that contributions or transfers must stay in an FHSA before you deduct them or use them in a qualifying withdrawal. A contribution made shortly before you withdraw for your purchase is still deductible, as long as it goes in before your first qualifying withdrawal.

The Home Buyers' Plan is different: RRSP contributions made in the 89 days before an HBP withdrawal may not be deductible, which is why it is often called the 90-day rule.

Transferring from an RRSP to an FHSA

You can move RRSP savings into an FHSA by a direct transfer between the institutions, usually with Form RC720. The transfer counts against your yearly and lifetime limits like a contribution, is not deductible, and does not give back the RRSP deduction room you used when you first contributed.

The benefit comes on the way out: that money, taken out as a qualifying withdrawal, is tax-free and never repaid, while a Home Buyers' Plan withdrawal has to be paid back to your RRSP. The trade-off is that the transfer uses FHSA room that a new, deductible contribution could have used. Withdrawing from your RRSP yourself and depositing the cash is not a transfer: the RRSP withdrawal is taxed as income and the deposit is an ordinary contribution.

Can you have more than one FHSA?

Yes, at more than one institution if you like, but the limits apply to all your FHSAs together: $8,000 a year in total, not per account. Direct transfers between your own FHSAs, usually with Form RC721, are tax-free and do not use room.

Spouses and common-law partners each have their own FHSA and their own limits, provided each one qualifies, so a couple can contribute up to $80,000 between them. You cannot contribute to your partner's FHSA or claim its deduction, but you can give them money to contribute to their own. The attribution rules, which would normally tax the investment income on that gift back to you, do not apply while the money stays in their FHSA, as long as the contribution does not create an excess amount. Both partners can then make qualifying withdrawals for the same home.

What is a qualifying withdrawal?

A qualifying withdrawal is the tax-free withdrawal you make to buy or build your first home, and you never repay it. There is no withdrawal limit: you can take out everything in your FHSAs, growth included, at once or in several withdrawals. You must meet all of these conditions:

• You are a first-time home buyer at the time of the withdrawal: you did not live, as your principal residence, in a home you owned or jointly owned at any time in the current calendar year before the withdrawal (not counting the 30 days just before it) or in the previous four calendar years.

• You have a written agreement to buy or build a qualifying home, with the purchase or construction completed before October 1 of the year after the withdrawal.

• You did not acquire the home more than 30 days before the withdrawal.

• You are a resident of Canada from your first qualifying withdrawal until you acquire the home.

• You live in the home, or intend to, as your principal residence within one year of buying or building it.

• You fill out Form RC725 and give it to your FHSA issuer.

Unlike the test for opening an account, this one ignores homes owned by your spouse or partner. If you opened your FHSA before moving into your partner's home, you can still withdraw to buy a new home together, and buying jointly with a parent who owns a home does not disqualify you. A qualifying withdrawal cannot be reversed: money you put back is a new contribution that you cannot deduct. Clear any excess amount before you withdraw, because a qualifying withdrawal does not remove it.

What counts as a qualifying home: a housing unit in Canada, existing or being built. That includes single-family and semi-detached homes, townhouses, mobile homes, condominium units, and apartments in duplexes, triplexes, fourplexes or apartment buildings. A share in a housing co-operative qualifies only if it gives you an equity interest in a unit, not just the right to live there as a tenant.

Using the FHSA and the Home Buyers' Plan together

You can use both for the same home, as long as you meet each program's conditions at the time of each withdrawal. The Home Buyers' Plan (HBP) lets you withdraw up to $60,000 from your RRSPs and repay it over 15 years; an FHSA withdrawal is never repaid. A couple who both qualify can each use their own FHSA and each withdraw up to $60,000 under the HBP, or $120,000 together.

For how the FHSA fits with the other federal and provincial programs, see government programs for home buyers, and for how much you need to put down, down payment requirements explained.

How long can you keep an FHSA?

Your FHSAs have to be closed by December 31 of the year in which the earliest of these happens:

• the 15th anniversary of opening your first FHSA;

• you turn 71;

• the year after your first qualifying withdrawal.

The CRA calls this your maximum participation period, and it runs from the day you open your first FHSA, not from your first contribution. Open your first FHSA in 2026 and never buy, and the deadline is December 31, 2041. Make your first qualifying withdrawal in 2030, and anything left in the account has to be moved out by December 31, 2031.

What happens to your FHSA if you don't buy a home?

You can move the money to your RRSP or RRIF tax-free, or withdraw it and pay tax on it.

• Transfer to an RRSP or RRIF: a direct transfer, usually with Form RC721, has no immediate tax and does not need or use any RRSP deduction room, as long as you have no excess FHSA amount. The money then follows the normal RRSP rules and is taxed when you withdraw it later.

• Taxable withdrawal: the amount is added to your income for the year, and tax is withheld when it is paid out.

There is no direct transfer to a TFSA. Money still in the account after the deadline loses its FHSA status, and its value on December 31 is added to your income for that year.

What happens if you over-contribute to an FHSA?

You pay a tax of 1% a month on the highest excess amount in each month until the excess is gone, and you report it on Form RC728 and its Schedule A.

For example, you open your first FHSA in 2026 and contribute $10,000 on October 15. You are $2,000 over, so you owe $20 (1% of $2,000) for each of October, November and December: $60 in all. On January 1, 2027, the new year's room absorbs the excess, but your 2027 room drops to $6,000.

To stop the tax sooner, take the excess out as a designated withdrawal, or send an excess RRSP transfer back to your RRSP as a designated transfer (both with Form RC727), or make a taxable withdrawal. A qualifying withdrawal does not remove an excess, so fix it before you buy.

What can you hold in an FHSA, and where can you open one?

Banks, credit unions, trust companies and insurance companies offer FHSAs. To open one, you need your social insurance number, your date of birth and any documents the issuer asks for to confirm that you qualify. What each issuer offers varies, so compare fees and investment choices.

An FHSA can generally hold the same qualified investments as an RRSP or TFSA: cash, GICs and term deposits, government and corporate bonds, mutual funds, and most securities listed on a designated stock exchange, such as stocks and exchange-traded funds. Some FHSAs hold only deposits and GICs; self-directed FHSAs let you choose your own investments. Contributing investments you already own counts as selling them at their market value that day, so the normal capital gains rules apply.

For the rest of the buying process, see the first-time home buyer's guide.