Unsure About Buying a Home? Open an FHSA Today

Buying a home in Canada has been challenging in recent years, but recent changes to mortgage rules, easing interest rates and more rate cuts expected ahead have lifted optimism among many prospective buyers. The process still begins with a down payment, and the larger it is, the better your mortgage options will be. If you plan to purchase your first home within the next few years, consider opening a first home savings account (FHSA) by December 31. Even if you cannot contribute this year, opening the account before year-end creates additional contribution room for 2025.

This article explains what an FHSA is, how contribution room works, why opening one now can help—even if you’re undecided about buying—and practical details about deadlines and account options.

What is a first home savings account (FHSA)?

The FHSA is a tax-advantaged registered account introduced in April 2023 to help first-time buyers accumulate a down payment faster. It combines benefits of other registered plans by allowing tax-deductible contributions and tax-free withdrawals when funds are used to buy a qualifying first home. Account holders can contribute up to $8,000 per year, with a lifetime contribution limit of $40,000 (and a combined higher total if both partners in a qualifying couple are first-time buyers).

An FHSA can hold a variety of qualifying investments, including guaranteed investment certificates (GICs), exchange-traded funds (ETFs), high-interest savings products, and other eligible securities, depending on the financial institution. Because the account shelters both contributions and their investment income from tax when used for a qualifying home purchase, it can be a powerful tool for building a down payment more efficiently than a regular taxable account.

What is the FHSA contribution limit?

A key feature of the FHSA is that contribution room is generated only after you open the account, unlike accounts such as the TFSA where room accrues annually based on age. That makes it advantageous to open an FHSA sooner rather than later so you can start accumulating the annual $8,000 contribution allowance.

For example, if you open an FHSA by December 31, 2024, you will receive $8,000 of contribution room for 2024 on the date you open the account, plus an additional $8,000 on January 1, 2025—totaling $16,000 in available contribution room for those two years. Contribution room accumulates up to the lifetime limit, and unused annual room can carry forward according to the plan’s rules.

Interest rates and product features vary by provider. Some FHSA savings accounts offer competitive interest while also providing flexibility and CDIC coverage for cash balances. Check current rates and terms at the institution where you plan to open your FHSA, and look for products that fit your timeline and risk tolerance.

EQ Bank FHSA Savings Account

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Interest rate: 1.50%
Minimum balance: n/a
Eligible for CDIC coverage: Yes

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Why opening an FHSA makes sense even if you’re undecided about home ownership

An FHSA works well alongside other first-time buyer tools. The Home Buyers’ Plan (HBP) lets eligible buyers withdraw funds from their registered retirement savings plan (RRSP) to apply toward a home purchase, and recent changes increased the HBP withdrawal limit, expanding options for down payment financing.

Regulatory changes to mortgage rules are also improving affordability for some buyers. For example, the insured mortgage price cap was raised in December 2024, and amortization options for first-time buyers were expanded, allowing longer repayment periods in certain cases. These shifts can lower monthly mortgage costs and make some properties more attainable.

Because an FHSA can remain open for up to 15 years, it offers flexibility. If you later decide not to buy a home, you can transfer FHSA funds directly into an RRSP or a registered retirement income fund (RRIF) without immediate tax consequences or loss of RRSP deduction room. By contrast, withdrawing funds from an FHSA for non-qualifying purposes generally triggers inclusion of the withdrawn amount in taxable income.

The FHSA deadline is almost here

To secure the first $8,000 of FHSA contribution room for the current year and effectively have two years’ worth of room available for 2025, open an FHSA by December 31. Even if you do not add money immediately, creating the account establishes contribution room and allows your savings to start earning interest sooner.

Interest compounding over even a short period can meaningfully boost savings toward a down payment, so look for FHSA products that match your timeline and risk profile. Remember that advertised interest rates are subject to change, and account features—including minimum balances, GIC terms and the availability of CDIC protection—vary by institution.

Rates and product features mentioned are subject to change; always confirm current details with the provider when opening an account.