Put the yearly maximum of $8,000 into an FHSA for five years at a 5% return and you end up with about $45,337. Of that, $40,000 is your own money and $5,337 is growth. For an Ontario resident earning $90,000, the first-year deduction saves about $2,372 in tax.
What an FHSA is
The First Home Savings Account is a registered account for first-time buyers. Contributions are deductible, as with an RRSP. Withdrawals for a qualifying first home are tax free, as with a TFSA. Having both is why it ranks among the strongest ways to save for a down payment.
The limits
You can add up to $8,000 a year, and $40,000 over your lifetime. Contribute less in a given year and the unused part carries forward, up to $8,000, into the next. The calculator takes your yearly amount, capped at the yearly limit, and warns you when the lifetime cap could apply.
Who qualifies
You must be a Canadian resident, at least 18, and a first-time buyer. That generally means you have not lived in a home you owned this year or in the previous four calendar years. Read the CRA’s definition. The rules on qualifying homes are specific and easy to misjudge.
How long it lasts
An FHSA stays open for up to 15 years, or until you turn 71, whichever comes first. If no home is bought, you can move the money to an RRSP without using up RRSP room. Hence the 15 in the years field.
The deduction
The first deduction is valued at your marginal rate. At $90,000 in Ontario, $8,000 saves $2,372, or 29.65%. You may also hold the deduction back and claim it in a later year, which suits someone who expects a higher income then.
Pairing it with the Home Buyers’ Plan
Many buyers use the FHSA together with the RRSP Home Buyers’ Plan, which lets first-time buyers withdraw from an RRSP. Combined, the two can build a bigger down payment than either would alone, since each has its own limit and its own rules. Confirm the current limits with the CRA before you plan around them.
A larger example
Saving $8,000 a year for five years at 5% builds $45,337. Begin with $5,000 already in the account and the result rises by about $6,400, thanks to extra growth on the starting balance. Change the starting balance above to see your own version.
Buying with a partner
Each partner who qualifies gets a separate FHSA, so two people can save up to $16,000 a year together. A couple can pool the balances toward one down payment. Each must pass the first-time buyer test.
Before you open one
You open an FHSA at a bank or another institution. You can hold more than one account, but the limits cover all of them together. Opening early starts the 15-year clock and also starts your yearly room. Even a small deposit counts, so there is little reason to wait until you can fund the whole yearly amount.
Where to go next
Work out the down payment you need with the down payment calculator. Set the result beside the RRSP calculator and the TFSA calculator. The mortgage payment calculator shows the monthly payment.
Frequently asked questions
How much can I put in an FHSA?
$8,000 a year, up to $40,000 for life.
Are FHSA contributions deductible?
Yes. They reduce your taxable income like RRSP contributions.
Are FHSA withdrawals taxed?
Not when used for a qualifying first home.
Can I carry forward unused room?
Yes, up to $8,000 into the next year.
What if I do not buy a home?
You can transfer the money to an RRSP, and the account closes after 15 years.
Who counts as a first-time buyer?
Generally someone who has not lived in a home they owned in the current year or the previous four calendar years.
Sources and updates
Last reviewed: . Full disclaimer. How we build calculators. Editorial policy.
Estimate only. This calculator gives general information for planning. It is not tax, legal or financial advice, and it is not affiliated with the City of Toronto, MPAC or the Canada Revenue Agency. Results depend on the numbers you enter and may differ from official amounts. Check official sources or a qualified professional before you decide.