Can a FHSA Help You Buy a Home?

In short? 100%.

The First Home Savings Account—or FHSA for short—is probably one of the best-kept secrets in the 2025 home buying game. If you’re just starting to think about buying your first place, this account gives you a rare combo: tax breaks when you contribute, tax-free growth while your money’s invested, and no tax at all when you take it out to buy a home. It’s like getting the best of both an RRSP and a TFSA— without the downsides.

So, How Does the FHSA Actually Work?

Let me walk you through it—no jargon, just what you really need to know:

Who can open one? You’ve got to be a Canadian resident, at least 18, and you can’t have owned or lived in a home you (or your spouse) owned in the last four years. If you’re just getting into the market, you’re probably good to go.
How much can you put in? You can contribute up to $8,000 a year, with a lifetime max of $40,000. It’s flexible, too.
What if I don’t max it out this year? No worries—you can carry forward any unused room. Say you only manage $5,000 this year? That extra $3,000 rolls into next year.
How long do you have to use it? You’ve got 15 years from when you open the account—or until the year you turn 71—to use those funds for a qualifying home purchase.

3 Big Ways FHSA Helps You Buy a Home

1. Grows Your Down Payment Faster

Tax deductions now (like an RRSP), plus tax-free growth (like a TFSA).
That refund? Reinvest it or put it toward closing costs.

2. No Repayments, Ever

Unlike the Home Buyers’ Plan, you don’t need to pay back what you withdraw.
Once it’s in your FHSA, it’s yours—no strings attached.

3. Works With Other Programs

Stack it with the Home Buyers’ Plan (HBP) and TFSA for a bigger down payment.
Example: A couple could combine $40K each in FHSAs, $60K each via HBP, plus TFSA funds. That’s serious buying power.

FHSA vs. Other Accounts

Account Type	Max Withdrawal	Tax on Growth	Repayment Required
FHSA	$40,000	❌No	❌No
RRSP (HBP)	$60,000	Deferred	✅Yes (within 15 yrs)
TFSA	Unlimited	❌No	❌No

Pros & Cons at a Glance

FHSA

Pros: Tax-deductible, tax-free growth, no repayment.
Cons: Use limited to first home, 15-year window.

HBP

Pros: High withdrawal limit, established program.
Cons: Repayment required, or it’s taxed.

TFSA

Pros: Flexible—use for anything, anytime.
Cons: No upfront tax break.

Real Example: FHSA + HBP = Dream Home

Let’s say you start saving in 2025:

Contribute $8,000 annually into your FHSA.
After 5 years, you’ll have $40,000 (plus growth).
Combine this with $60,000 HBP = $100,000 for your down payment.
Add TFSA funds and you’re well-positioned for a $500,000 home.

Here’s a client story: meet our client Nataliia, a 29-year-old young professional in Calgary who recently moved from Ukraine. She’s working hard to build a new life—and dreams of owning her first home. But with rent climbing and down payments feeling out of reach, she needed a new path forward.

That’s when she discovered the First Home Savings Account (FHSA). She opened one and contributed $8,000 in her first year—lowering her taxes just like an RRSP. And here’s the best part: when she uses the money to buy a home, it’s completely tax-free, just like a TFSA.

Fast forward two years: Nataliia’s saved $16,000, plus investment gains. She combines it with her RRSPs through the Home Buyers’ Plan—and suddenly, she has a real down payment.

Want to be like Nataliia? Contact Red Key Mortgage to turn “one day” into day one.

Key Rules & Pitfalls to Avoid

Qualifying withdrawals: Must be for a principal residence in Canada, with a written purchase agreement.
Account expiry: Unused funds must be withdrawn (taxed) or transferred to RRSP/RRIF before 15 years or age 71.
Over-contributions: Subject to a 1% per month penalty.
Missed timelines: Funds must be withdrawn by October 1 of the year following the qualifying purchase.

Canada Context

Local Grants: Canada’s First-Time Homebuyer Incentive offers additional support. Check local programs.
Market Snapshot: As of 2025, the average Canadian home price is around $500,000. FHSA contributions can make a serious dent in your down payment.

Frequently Asked Questions

Q: Can both spouses open FHSAs?
A: Yes. Each eligible spouse can open and contribute to their own FHSA, doubling the household benefit.

Q: What if I don’t buy a home in 15 years?
A: You can transfer the balance to your RRSP without tax consequences.

Q: Can I transfer FHSA to an RRSP?
A: Yes, tax-free transfers are allowed any time before the FHSA expires.

Q: Will an FHSA affect my mortgage approval?
A: No. In fact, it can strengthen your application by increasing your available down payment.

Conclusion: FHSA is a First-Time Buyer’s Ally

If you’re planning to buy your first home in Canada, the FHSA is one of the smartest savings tools available in 2025. Its tax advantages, flexibility, and compatibility with other programs like HBP and TFSA make it a game-changer.

Next Steps:

Open your FHSA as early as possible.
Max out contributions to benefit from tax savings and compounding.
Combine it with other programs to accelerate your homeownership journey.

📞Need help navigating your mortgage or planning your purchase? Contact Red Key Mortgage today and speak with a friendly, expert advisor.