First Home Savings Account (FHSA): 2026 rules and limits
The First Home Savings Account (FHSA) lets first-time home buyers contribute up to $8,000 a year and $40,000 in total. Contributions are deductible like an RRSP, and a qualifying withdrawal to buy your first home is tax-free like a TFSA.
- $8,000Annual participation room
- $40,000Lifetime contribution limit
- $16,000Most you can put in one year (with carry-forward)
- 15 yearsLongest an FHSA can stay open
Who can open an FHSA
You can open an FHSA if you meet all of these conditions:
- You are a resident of Canada.
- You are at least 18 (19 in provinces and territories where that is the age to enter a contract) and no older than 71 on December 31 of the year you open it.
- You are a first-time home buyer: in the current calendar year or the previous 4 calendar years, you did not live, as your main home, in a home that you owned or jointly owned. The same test applies to a home owned by your current spouse or common-law partner: if you lived in it as your main home during that period, you don't qualify.
Example: Aidan sold a condo he lived in during 2022. In 2026 the 4-year look-back covers 2022 to 2026, so he does not qualify. From January 1, 2027, the look-back is 2023 to 2027, and he can open an FHSA if he has not owned and lived in a home since.
Contribution room and carry-forward
Your "participation room" is $8,000 in the year you open your first FHSA. Nothing builds up before that, so opening an account early, even with a small deposit, starts the clock.
If you contribute less than $8,000 in a year, the unused part carries forward to the next year, but the carry-forward is capped at $8,000. That means the most you can contribute in any one year is $16,000 ($8,000 for the year plus $8,000 carried forward). Room you don't use beyond that is not lost from the $40,000 lifetime total; it just can't be used faster.
| Year | Room available | Contributed | Carried forward |
|---|---|---|---|
| 2026 | $8,000 | $3,000 | $5,000 |
| 2027 | $13,000 | $0 | $8,000 (cap) |
| 2028 | $16,000 | $16,000 | $0 |
In 2027 the unused room was $13,000, but only $8,000 can be carried into 2028. Total contributed by the end of 2028 is $19,000, leaving $21,000 of the $40,000 lifetime limit.
You can also move money directly from your RRSP to your FHSA (Form RC720). This uses FHSA room, gives no deduction, and does not restore your RRSP room. Over-contributions are taxed at 1% a month on the highest excess amount in the month until removed.
Tax treatment
- Going in: contributions are deductible on your tax return, like an RRSP contribution. Only the account holder can claim the deduction.
- While invested: interest, dividends and gains are not taxed.
- Coming out for a home: a qualifying withdrawal is tax-free and never has to be repaid.
- Coming out for anything else: the withdrawal is added to your income and taxed.
Qualifying withdrawal
To take money out tax-free for a home, all of these must be true at the time of the withdrawal:
- You are a first-time home buyer for withdrawal purposes (no owner-occupied home in the current year, apart from the 30 days before the withdrawal, or in the previous 4 calendar years).
- You have a written agreement to buy or build a home in Canada, with a closing or completion date before October 1 of the year after the withdrawal.
- You did not acquire the home more than 30 days before the withdrawal.
- You intend to live in it as your main home within one year after buying or building it.
- You stay a resident of Canada from the first qualifying withdrawal until you acquire the home.
- You give your FHSA issuer Form RC725.
Two buyers, such as spouses, can each make a qualifying withdrawal from their own FHSA for the same home.
When the FHSA must close
Your FHSA "participation period" ends on 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.
Whatever is left must be dealt with by then. You can withdraw it as taxable income, or transfer it directly to your RRSP or RRIF. A direct transfer to an RRSP or RRIF does not use or reduce your RRSP deduction room (as long as there is no excess FHSA amount). So an FHSA you never use for a home still works as extra, deductible retirement savings. If you withdraw the money yourself and then contribute it to an RRSP, it counts as a normal taxable withdrawal and a new RRSP contribution.
Using the FHSA with the Home Buyers' Plan
You can take money from your RRSP under the Home Buyers' Plan (HBP) and make a qualifying FHSA withdrawal for the same home, as long as you meet the conditions of each. The difference: the HBP must be repaid to your RRSP over 15 years, while the FHSA withdrawal never has to be repaid. The HBP limit is currently $60,000.
Worked example. Sofia, 27, earns $70,000 and opens an FHSA in January 2026. She contributes $8,000 a year for five years (2026 to 2030), reaching the $40,000 limit. If her deduction saves her roughly 30% in tax, that is about $2,400 a year back, or $12,000 in total. Suppose her investments grow the account to $44,000. In 2031 she signs to buy a condo, withdraws the full $44,000 tax-free, and also takes $20,000 from her RRSP under the HBP. Her down payment is $64,000. She repays the $20,000 HBP amount over 15 years; the FHSA money is hers to keep. Her FHSA must close by December 31, 2032, the year after her first qualifying withdrawal.
The growth figure in this example is only an illustration; investment returns are not guaranteed. Tax savings depend on your own marginal rate.
Common mistakes
- Waiting to open the account: room only starts in the year you open your first FHSA.
- Withdrawing from one plan and re-depositing in another instead of asking for a direct transfer.
- Re-contributing after a qualifying withdrawal: it counts as a new contribution, is not deductible and can create an excess.
- Forgetting the closing deadline and having to take a taxable withdrawal.