The FHSA, Explained Properly

The First Home Savings Account (FHSA) combines an RRSP's tax deduction on contributions with a TFSA's tax-free withdrawals, specifically for a first home purchase. You can contribute up to $8,000 per year, to a $40,000 lifetime limit, and unused room carries forward up to a maximum of $8,000 — so opening an account early, even with small contributions, builds valuable room over time.

Contributions are tax-deductible in the year you make them (or a later year, if you choose to carry the deduction forward), and a qualifying withdrawal to buy your first home — including any investment growth inside the account — comes out completely tax-free.

To be eligible, you generally can't have owned a home you lived in during the current calendar year or the four preceding ones. The account can stay open up to 15 years, or until the end of the year you turn 71, or until the year after your first qualifying withdrawal — if you don't end up buying, funds can be transferred tax-free into an RRSP rather than lost.

The FHSA and the RRSP Home Buyers' Plan aren't mutually exclusive — many buyers use both toward the same purchase, meaningfully increasing how much they can draw from registered savings for a down payment.