Buying Your First Home Just Got Easier with FHSA
Saving up for your first home can feel like a mountain to climb, but the First Home Savings Account (FHSA) is here to help Canadians, especially young people and newcomers, get a head start.
It’s a savings tool designed to help you grow your down payment faster, with tax-free benefits that make your money go further.
Let’s break down how it works and why it could be the smartest move you make this year.
What Is the FHSA?
The FHSA is a registered account in Canada created just for first-time homebuyers. It’s like a mix between a TFSA (Tax-Free Savings Account) and an RRSP (Registered Retirement Savings Plan).
- You don’t pay taxes on any interest, dividends, or investment growth.
- Your contributions are tax-deductible, which could lower what you owe at tax time.
- You can withdraw the money tax-free when you’re ready to buy your first home.
This means you can save faster and keep more of your savings.
Who Qualifies for the FHSA?
- Be a Canadian resident
- Be at least 18 years old
- Be a first-time homebuyer (haven’t owned a home in the last 4 years)
Even if you’ve recently moved to Canada, you may qualify. It’s a great tool for newcomers who are planning to settle down and buy their first home here.
How Much Can You Save?
You can contribute:
- Up to $8,000 per year
- Up to $40,000 total
If you don’t hit the full $8,000 in a year, the unused amount rolls over to future years. So don’t stress if you can’t save the full amount right away, you’ll still have the chance to catch up later.
Can You Invest FHSA Funds?
Yes! You’re not limited to just cash savings. You can use the money inside your FHSA to invest in:
- Stocks
- Bonds
- Mutual Funds
- GICs
- ETFs
This gives you a better shot at growing your money over time, although it comes with investment risks. A financial advisor can help you choose smart options based on your comfort level.
When Can You Use It?
Once your FHSA is open, you must use the money to buy your first home within 15 years, or by age 71, whichever comes first.
To qualify for the tax-free withdrawal, the home must be:
- In Canada
- Your main residence within one year of buying it
What If You Don’t End Up Buying a Home?
No problem. You can transfer the FHSA savings to your RRSP or RRIF tax-free. This means the money you saved still supports your future, just in a different way.
And if you simply withdraw the money for a different reason (not a home purchase), you’ll pay regular income tax on it, just like RRSP funds.
Why This Matters (Especially for Newcomers and Young Buyers)
If you’re just starting out, every dollar counts. The FHSA helps you save smarter and buy sooner, without feeling overwhelmed. It also helps reduce the amount you need to borrow, which can lower your mortgage payments.
For newcomers to Canada, the FHSA can also make homeownership more achievable without needing a massive down payment saved up right away.
Ready to Start Saving for Your First Home?
At Niche Mortgages, we specialize in helping first-time homebuyers and newcomers, even those with bad credit, navigate the path to homeownership. Whether you’re just learning about the First Home Savings Account or you’re ready to apply for your first mortgage, we’re here to help without the pressure.
Have questions about how the FHSA fits into your plan? Or want to know what kind of mortgage you can get with your credit history?
Contact Niche Mortgages today to speak with a member of our expert team. We’ll guide you step by step so you can save smarter, apply confidently, and move into your first home with peace of mind.
About the Author
Jonathan Yien
Jonathan Yien is a seasoned mortgage broker at DLC Clear Trust Mortgages with a rich background in financial advising from his time at TD Canada Trust. He is dedicated to helping clients achieve their financial and homeownership goals.