Canadians can now boost their savings for a down payment on a home with a first home savings account (FHSA). The account, also referred to as the tax-free first home savings account, creates up to $40,000 in tax-free savings room for first-time home buyers. To date, more than 300,000 Canadians have opened an FHSA. In this article, we’ll answer common questions about the account and help you find the best one for your needs.
Frequently asked questions about FHSAs
On April 1, 2023, Questrade became the first company to launch an FHSA in Canada. Since then, more than 20 other financial institutions, including all of Canada’s Big Six banks, have launched the new account. More are expected to make their FHSAs available in 2024.
Overall, the roll-out of FHSAs has been slower than anticipated, and availability remains limited today, even at some of the large banks. For example, you may have to speak with a representative in person to open an account, and some FHSAs are not yet available through banks’ investment platforms.
Where you can open an FHSA right now
More than 20 financial institutions currently offer an FHSA, according to numbers released by the federal government in November 2023. The MoneySense editorial team will update this page as more accounts become available, so you can easily find the best FHSA. Here are the accounts available right now. As all FHSAs are registered, the accounts and interest rates referred to are registered. (Providers that have not made details available on their site and/or did not reply to requests from MoneySense have not been included.)
Compare FHSA savings rates on cash
A handful of FHSAs offer interest on your cash savings, and currently, some institutions are offering promotional interest rates for a limited time. The table below lists the interest rate you would receive by moving money into the account as of the date of publication; in some cases, it is a promotional rate. Offers are subject to change. Please check with the FHSA provider.
| FHSA provider | Savings rate | Promotion ends |
|---|---|---|
| BMO | 2.00% | n/a |
| CIBC | 2.00% | n/a |
| Desjardins | 2.50% | n/a |
| EQ Bank | 1.50% | n/a |
| Hubert Financial | 2.30% | n/a |
| Meridian | 2.75% | n/a |
| National Bank | 0.55% to 2.25% (based on account balance) |
n/a |
| Saven Financial | 2.85% | n/a |
| Scotiabank | 0.25% | n/a |
| TD | 0.05% | n/a |
MoneySense insight
The funds held within FHSAs at eligible financial institutions are protected within certain limits. Up to $100,000 in eligible deposits (meaning cash and guaranteed investment certificates) are covered through the Canada Deposit Insurance Corporation (CDIC). And up to a combined $1 million in investments (such as securities, cash and commodities) held in registered accounts is covered through the Canadian Investor Protection Fund (CIPF). The latter offers separate coverage for other accounts and registered savings plans.
—MoneySense editors
How to choose an FHSA
To pick the right FHSA, you should ask yourself the same questions you would when opening any other account, says Aaron Hector, a Certified Financial Planner and private wealth advisor at Calgary-based CWB Wealth. It’s important to consider the FHSA’s investment options and fees, as well as whether you’ll be “on your own” or receive financial advice from the company offering the account.
As more FHSAs become available, consider these factors before opening the account:
- The type of service offered: Do you prefer to speak with an investment advisor? Online platforms might not provide the level of service you need—ask what kind of support you can expect.
- Your investment knowledge: Consider your level of comfort with investing. Experienced DIY investors could consider an FHSA at a self-directed online brokerage, so they can manage their own investments. New to investing? You may prefer to invest through a low-cost robo-advisor or to have an investment advisor manage your assets.
- Trading and management fees: If you prefer to invest the money within your FHSA, take a close look at the fees for making trades or managing your portfolio. These costs can quickly add up. Your comfort with paying trading and management fees should also guide your decision on whether to invest in your FHSA through a brokerage, a discount brokerage or a robo-advisor.
- Interest rates: Some providers will offer competitive interest rates on funds held within your FHSA, as they do with tax-free savings accounts (TFSAs). As a savings account, an FHSA that pays interest may be a good fit for people who simply want to earn tax-free interest on their cash, without the risk of investing in securities. If that’s your strategy, go with the account offering the highest interest rate on your savings.
A guide to FHSAs in Canada
What is an FHSA?
Short for first home savings account, the FHSA is a type of registered account designed to help Canadians save to buy their first home, namely the down payment. A home’s minimum down payment depends on its purchase price, but many home owners aim for a down payment of 20% to avoid having to pay mortgage default insurance. You can contribute up to $8,000 per year into an FHSA, up to a lifetime limit of $40,000.
The FHSA shares similarities with the RRSP and the TFSA, which are also available to Canadians. FHSA contributions are tax-deductible, like with an RRSP, and the money can be withdrawn tax-free, like with a TFSA—as long as the withdrawal is used for a down payment on a home. Funds put into an FHSA grow tax-free and are not subject to capital gains tax.
What is an FHSA? Read the MoneySense Glossary definition.
FHSA start date
FHSAs became available on April 1, 2023, through an act of legislation passed in 2022. FHSAs can be issued by banks, credit unions, insurance companies and trust companies. Eventually, you should be able to find them wherever RRSPs and TFSAs are offered.
FHSA rules
To open an FHSA, you must be a Canadian resident aged 18 or older. The FHSA can remain open for 15 years, or until the end of the year you turn 71, or until the end of the year following the year in which you make a qualifying home purchase—whichever comes first.
You can contribute up to $8,000 per year toward your FHSA, up to a lifetime limit of $40,000. Unused contribution room, up to a maximum of $8,000, can be carried forward one year; this means that if you do not contribute anything in one year, you can contribute up to a maximum of $16,000 the following year. Unlike with a TFSA, however, FHSA contribution room only begins to accumulate once you’ve opened the account—it does not automatically begin when you turn 18 or apply retroactively to when you turned 18.
Who can open an FHSA?
You can open an FHSA if you meet all of these qualifying criteria at the time of opening the account:
- You are 18 years of age or older
- You are a resident of Canada
- You are a first-time home buyer
To be considered a first-time home buyer when opening an FHSA, you must not have lived in a qualifying home that you owned or jointly owned at any time in the calendar year before the account is opened, or at any time in the preceding four calendar years. And you must not have lived in a qualifying home that your spouse or common-law partner owned or jointly owned, at any time in the calendar year before the account is opened or at any time in the preceding four calendar years.
What investments can you hold in an FHSA?
In Canada, there are limitations on the types of investments you can hold in registered accounts. The federal government has stated that the qualified investments for an FHSA are the same as those for a TFSA. This means you can hold the following assets in an FHSA:
You cannot hold the following investments in your FHSA:
- Land
- Shares of private corporations
- General partnership units
Read more: “What can I hold in an FHSA?”
What happens to the money in an FHSA if you don’t buy a home?
If you decide not to use money in an FHSA for a home purchase—say, you decide that renting is better for you, you live with someone who already owns their place, or you inherit real estate—you can transfer the funds to an RRSP or a RRIF without being penalized or affecting your RRSP contribution room. In essence, the FHSA creates additional RRSP contribution room, up to $40,000, for all Canadians who meet the definition of a first-time home buyer.
However, keep in mind that an FHSA withdrawal used for a home purchase is not taxed, whereas funds withdrawn from an RRSP or a RRIF are taxed.
Using an FHSA with other accounts and home-buying programs
When buying your first home, you can use the FHSA with the Home Buyers’ Plan (HBP), which allows you to borrow up to $60,000 from your RRSP. And when buying a home jointly with another person, you can combine your FHSA and HBP withdrawals for a sum of at least $80,000 from your FHSAs and $120,000 through the HBP, for a total of $200,000. That’s equal to a 20% down payment on a $1 million home.
These calculations do not account for potential tax-free investment growth in the FHSA, nor any money you may have saved in a TFSA, both of which would boost the total amounts available for a down payment. Note that HBP withdrawals are taxed if not repaid within 15 years.
To get a sense of how your investments might grow in an FHSA, use our compound interest calculator.
FHSAs: How they compare to RRSPs and TFSAs
Here’s a chart that shows the key differences and similarities between these three accounts.
| FHSA | RRSP | TFSA | |
|---|---|---|---|
| Primary purpose is saving for a down payment | Yes | No, though you can make an HBP withdrawal | Depends on the individual |
| Contributions are tax-deductible | Yes | Yes | No |
| Annual contribution limit | $8,000 | Based on your personal income, with a maximum of $31,560 in 2024 | $7,000 in 2024 |
| Annual contribution limit is based on your income | No | Yes | No |
| Unused contribution room carries forward | Yes, but you can carry forward a maximum of $8,000, for a total contribution of $16,000 in a given year | Yes | Yes |
| Lifetime contribution limit (as of 2023) | $40,000 | Based on your personal income | $95,000 (for Canadians born in 1991 or earlier) |
| Account withdrawals are taxed | Depends. Not taxed when used for a home purchase. | Yes, unless used for a home purchase through the HBP | No |
Are FHSA deposits insured?
Yes. Effective April 1, 2023, the Canada Deposit Insurance Corporation (CDIC) will begin to offer separate coverage of $100,000 for eligible deposits held in an FHSA. Canadians’ deposits are now covered under nine different insured deposit categories at CDIC member institutions. Note, however, that while the CDIC covers GICs, it does not cover other types of investments.
Will the FHSA help first-time home buyers?
Many Canadians dream of home ownership. However, many factors have long made it a difficult goal to achieve, and that continues to be the case in 2024. These factors include high real estate prices, which require saving a substantial down payment and having a high income to qualify for a mortgage, as well as high rents, which make saving more difficult. (See how much income you need to afford a home in the Greater Toronto and Vancouver areas.)
The FHSA is one of many tools Canadians can use to save up for a home. Most first-time buyers will have to use a combination of tools and accounts, such as investing in a TFSA and withdrawing from an RRSP (through the HBP), in order to make it onto the property ladder in Canada.
