FHSA Explained: First Home Savings Account (Ontario, 2026)
The FHSA (First Home Savings Account) lets Ontario first-time buyers save up to $40,000 for a home, tax-deductible going in and tax-free coming out.
Ibrahim Farooqui · Head of Real EstateJul 13, 2026 · 7 min read
The First Home Savings Account (FHSA) is a registered account that helps first-time buyers save for a down payment. You can contribute up to $8,000 a year, $40,000 in total. The money is tax-deductible going in, like an RRSP, and tax-free coming out for a first home, like a TFSA. It is one of the strongest savings tools a first-time buyer in Ontario has.
What is the FHSA and how does it work?
The FHSA combines the best features of two other accounts. When you put money in, you can deduct it from your taxable income, which can lower your tax bill for the year. When you take it out to buy your first home, you pay no tax on the contributions or the growth.
Any growth inside the account (interest, dividends, or investment gains) is also sheltered from tax while it sits there. So the FHSA is doing two jobs at once: saving you tax today and letting your down payment grow tax-free.
You open an FHSA at a bank, credit union, or investment provider. Inside it, you can hold cash, GICs, or investments, depending on the provider.
$40,000
the lifetime FHSA contribution limit for a first-time buyer
How much can I contribute to an FHSA?
The FHSA has two limits you need to know.
Annual limit: up to $8,000 per year.
Lifetime limit: up to $40,000 in total across all the years you hold the account.
If you do not use your full $8,000 in a year, you can carry forward unused room (up to a set amount) to a future year. So opening the account early, even with a small deposit, starts building room you can use later.
Reaching the full $40,000 typically takes five years of maxing out contributions, so the earlier you start, the more room you build.
Who is eligible for an FHSA?
To open an FHSA in Canada, you generally need to:
Be a resident of Canada.
Be at least 18 (or the age of majority in your province) and under 71.
Be a first-time home buyer, meaning you did not live in a home you or your spouse owned in the current year or the previous four calendar years.
Because eligibility is based on your personal status, a couple can each open their own FHSA. Two accounts means up to $80,000 in combined tax-advantaged savings toward one home. That can cover a large share of a down payment in many GTA municipalities.
FHSA vs RRSP Home Buyers' Plan vs TFSA
All three accounts can hold down payment savings, but they behave differently. The FHSA is purpose-built for a first home, which is why it is usually the first account to fill.
Comparing three accounts for a down payment
Contribution tax-deductible?. FHSA: Yes; RRSP Home Buyers' Plan: Yes; TFSA: No
Withdrawal for a home taxed?. FHSA: No, tax-free; RRSP Home Buyers' Plan: No, if repaid; TFSA: No, tax-free
Must repay the withdrawal?. FHSA: No; RRSP Home Buyers' Plan: Yes, over 15 years; TFSA: No
Built for a first home?. FHSA: Yes; RRSP Home Buyers' Plan: Home Buyers' Plan is; TFSA: No, general purpose
Contribution limit. FHSA: $8,000/yr, $40,000 total; RRSP Home Buyers' Plan: Withdraw up to $60,000; TFSA: Annual TFSA room
Source: Zown Realty, Ontario 2026
The short version: the FHSA gives you the tax deduction of an RRSP and the tax-free withdrawal of a TFSA, with no repayment required. That combination is hard to beat for a first home.
Does the FHSA stack with the RRSP Home Buyers' Plan?
Yes. You can use both for the same purchase. The RRSP Home Buyers' Plan lets you withdraw up to $60,000 from your RRSP, which you then repay over 15 years. The FHSA adds up to $40,000 on top, with nothing to repay.
Used together by one buyer, that is a large pool of tax-advantaged savings. For a couple, each partner can use both accounts, which multiplies the total further. This stacking is one of the main reasons the FHSA is worth opening even if you already contribute to an RRSP.
How does the FHSA fit my down payment plan?
The FHSA is a savings vehicle, not the whole plan. It works best as one layer inside a bigger strategy that also includes your minimum down payment, land transfer tax rebates, and any cash back you receive.
In Ontario, the minimum down payment is 5% on the first $500,000, 10% on the portion from $500,000 to $1,500,000, and 20% above $1,500,000. On an $800,000 home, that is $25,000 plus $30,000, so $55,000 minimum. Your FHSA and RRSP savings can supply a big share of that.
First-time buyers in Ontario can also claim a land transfer tax rebate of up to $4,000 provincially, and up to $4,475 more in the City of Toronto, for as much as $8,475 in Toronto. That is money that stays in your pocket at closing.
At Zown, buyers can also receive a Down Payment Boost: cash back of up to 1.25% of the purchase price, to a maximum of $25,000, paid into your savings at closing. On an $800,000 home that is roughly $10,000. Most buyers put it toward closing costs and post-closing expenses like moving and furnishing.
So a realistic first-home plan can layer your FHSA, an RRSP Home Buyers' Plan withdrawal, the Ontario land transfer tax rebate, and a Down Payment Boost. Each piece does a different job, and together they lower how much cash you need to bring on your own.
Frequently asked questions
How much can I put in an FHSA each year?
You can contribute up to $8,000 per year, with a lifetime cap of $40,000. If you do not use the full $8,000 in a year, you can carry forward unused room to a later year (up to a set limit), so opening the account early helps you build room even before you are ready to buy.
Is the FHSA tax-deductible?
Yes. FHSA contributions are tax-deductible, much like RRSP contributions, so they can reduce your taxable income for the year you contribute. That deduction is one of the account's biggest advantages, because it can lower your tax bill while you save for your first home.
Can my spouse and I each have an FHSA?
Yes. Eligibility is based on each person individually, so both partners can open their own FHSA if each is a first-time buyer. That means up to $80,000 in combined FHSA savings toward one home, which can cover a large part of a down payment in many parts of Ontario.
Can I use the FHSA and the RRSP Home Buyers' Plan together?
Yes, they stack. You can withdraw up to $60,000 through the RRSP Home Buyers' Plan and also use up to $40,000 from your FHSA for the same purchase. The FHSA needs no repayment, while the Home Buyers' Plan is repaid over 15 years.
What if I do not end up buying a home?
If you do not buy, your FHSA savings are not lost. The rules generally let you transfer the funds to your RRSP or RRIF without using up RRSP room, keeping the tax shelter intact. Check current CRA rules or a tax advisor, since account rules can change over time.
Do I need to close my FHSA after I buy?
There are time limits on how long an FHSA can stay open, and it is meant to be used within a set window. Once you make an eligible first-home withdrawal or the account reaches its end, you would typically close it or transfer any remaining funds. Confirm the current timelines with your provider.
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