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The FHSA: Canada’s First Home Savings Account Explained

Housing affordability is a key concern for many Canadians, especially those looking to purchase their first home. That’s where the FHSA comes in.

According to a 2018 report from the Canadian Mortgage and Housing Corporation (CMHC), the national average price for a detached bungalow was just over $400,000, while the average price for a standard two-storey home was $500,000. In some of Canada’s larger cities, such as Toronto and Vancouver, prices are even higher, with the average detached bungalow costing more than $1 million or more.

With housing prices this high, incentives to save for a down payment on a first home are critical. Two popular options are to save into a Registered Retirement Savings Plan (RRSP) and use Canada’s Home Buyers’ Plan (HBP). However, beginning in 2023 there is a new option that will be available – the First Home Savings Account (FHSA).

What is the FHSA? 

The FHSA account is meant to help Canadians save for the cost of a down payment for their first home. With the FHSA, you can save up to $8,000 per year, to a maximum of $40,000 per person. Presuming a rate of return of 5%, the money you have accumulated throughout the years could grow to be more than $45,000 in 5 years.

How does the FHSA compare to the RRSP or Home Buyers’ Plan? 

The first question which would come to mind when looking at this new plan is how does the FHSA compare to the HBP, which allows you to withdraw $35,000 from your RRSP? When you make an HBP withdrawal, you are required to pay back the funds within a 15-year period. Under the FHSA, you can contribute up to $40,000 as noted above and you do not need to repay these funds after the withdrawal.

The FHSA can only remain open for up to 15 years, or until the end of the year when you turn 71 years old. 

The draft legislation has also increased the flexibility of FHSA contributions by allowing an individual to carry forward unused portions of their annual contribution limit up to a maximum of $8,000. This means that if you contribute less than $8,000 in a given year, you can then contribute any unused amount in a future year, in addition to your annual contribution limit of $8,000 (subject to the $40,000-lifetime limit).

How to qualify for the FHSA

To qualify for an FHSA account, there are a number of criteria you must meet. First, you must be a Canadian resident and you must be over 18 years old. Second, you must be a first-time home buyer, meaning, you cannot have owned a home in the four 4 preceding years before opening your FHSA. Finally, the funds in this account can only be used to purchase a primary residence and not investment properties.

The government is still in the process of developing the rules around the First Home Savings Account (FHSA), but we will keep you up to date as new information becomes available. In the meantime, feel free to contact me directly with any questions you have about the FHSA, so you can take advantage and make your dream of homeownership a reality.


  • W. Christopher Kovalchuk, MBA
    Chris began his professional career in 2016, as a financial analyst, in the Financial Technology Credit/Lending sector. He earned his MBA, part-time, from Concordia University in 2019. Chris has been a member of Claret since 2018 working in trading & research and recently moved into the role of Associate Portfolio Manager.

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