Tax-Free Money for Your First Home

with a First Home Savings Account

Interested in saving for your first home using tax-free dollars? Here’s how a First Home Savings Account (FHSA) works and 3 ways you can own your own home faster.

What is a FHSA?

First Home Savings Account (FHSA) is a government tax structure that started in April 2023 to help people save for their first home using tax-free dollars in a registered account. What you invest in your FHSA will be determined by when you want to buy your first home.

The Structure:

  • Pre-tax money going in – This is the exactly the same as an RRSP. Your contributions into the FHSA will reduce your tax bill.
  • Tax-free money coming out – This is exactly the same as a TFSA.
  • THE BOTTOM LINE – You never pay tax on this money.

Something this good must have limitations. If you asked this question, you would be right.

The Rules:


  • Maximum of $8,000/year
  • Up to one year carryforward: If you missed one year of contributions or a portion of a year, you can catch up that balance to a maximum of an additional $8,000 contribution
  • The lifetime limit is $40,000 of contributions (not including growth)


  • You must use the funds by the end of the 15th year from your first contribution
  • If you withdraw funds, you must have a written agreement to purchase or build a home by October 1st of the year following your withdrawal


  • Qualifying withdrawal – no tax owing and you never have to pay it back
  • Non-Qualifying withdrawal – taxable in the year withdrawn and it does not reinstate the room in a future year

FHSA RRSP TFSA Comparison TableRRSP, FHSA, TFSA Transfer Comparison Chart

Benefits of the FHSA

There are 3 benefits of the FHSA:

  1. Tax-Free Money to buy your first home: It is exactly that…tax free. There are no other programs as good as this
  1. First place for young people to put their long-term savings:
    • Why?
      • It has the same initial benefits as a RRSP
      • It has the added advantage of potentially being tax free for the first home
      • You can transfer funds to the RRSP later if you don’t end up using it (if you have the contribution room in your RRSP)
    • What it is not.
      • This is NOT a place to put short term savings or money that you may need in the future
  1. More funds for your first home: The RRSP First Time Home Buyers Program (HBP) is still available (max $35,000 towards first home)

Wrapping it up

The FHSA is a no brainer for anyone looking to buy their first home. It is $40,000 of contributions PLUS growth that can be used towards your first home. There are minimal downsides to this program.

The Government of Canada provides a full guide on how to open an FHSA, contribution rules, tax deductions for FHSA contributions and a calculator to help you estimate how much you could save for a down payment for your first home by participating to your FHSA – learn more here.

Connect Wealth is an independent financial planning firm that offers holistic advice to clients based on their current goals and future aspirations. We use well-established workflows and cutting-edge technology to maximize planning efficiencies while simplifying the process for clients. Learn how you can maximize your financial opportunities at

Watch the Video

In this month’s video, Vince Olfert, a Certified Financial Planner at Connect Wealth, explains how you can save tax-free money for your first home – tax-free in, tax-free out, and tax-free growth!

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