First Home Savings Account – FHSA Explained

General Drew Hermiston 10 Mar

On April 1st, 2023 the Canadian government will be rolling out a new savings program to help First Time Homebuyers save for a down payment. This program allows individuals to save $40,000 on a tax-free basis. Here is the First Home Savings Account Explained.

How does this differ from existing programs?

Prior to April 1st 2023 the two main vehicles used by  first time homebuyers to save for a down payment were through either a TFSA (Tax Free Savings Account) or RRSP (Registered Retirement Savings Program). Each has their own pros and cons associated with these accounts. The new First Home Savings Account will essentially combine the key attributes of a TFSA and RRSP into one account.

Benefits of RRSP for Down Payment

The benefit of saving through an RRSP account for the purposes of a down payment is that you are able to take advantage of tax deductions from  your contributions allowing you to pay less income tax. Through the current Canadian Home Buyers plan you are able to withdraw up to $35,000 tax-free from your RRSP. The disadvantages of this plan for the purpose of a down payment are that you  have to repay whatever you withdrew from your RRSP within 15 years of withdrawal.

Benefits of TFSA for Down Payment

The benefit of saving through a TFSA for the purposes of a down payment is that you are able to withdraw funds completely tax-free, without having to deposit funds back into the account like the RRSP through the Home Buyers Plan. The disadvantage to this account is that you are unable to receive tax deductions for any contributions you make to this account.

FHSA Explained

This is where this new FHSA program comes in. This account allows you to save up to $40,000 on a tax-free basis. Through this account you are able to have the benefits of tax deductions similar to the RRSP, with the ability to withdraw the funds for purpose of purchasing your first home tax-free like a TFSA. You are also not required to replace the withdrawn funds within any timeframe.

Qualified individuals can contribute up to $8,000 per year and any unused contributions carry over to the next year, for a lifetime maximum contribution of $40,000.

Individuals can open a FHSA through Canadian trust companies, life insurance companies, banks and credit unions.

You can then use this account to invest in mutual funds, publicly traded securities, ETFs, bonds or GICs in order to maximize your savings.

All in all, if you are saving money for the purposes of a down payment on your first home the FHSA is definitely something Canadians should be taking advantage of.


If you are a First Time Homebuyer and are interested in learning more about the mortgage process or want to see what home price you could be approved for, reach out to myself to set up a mortgage consultation.

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Drew Hermiston

Mortgage Agent

Dominion Lending Centres YBM Group

Tel: 705-818-5865

Lic# 11129

Each Office Independently Owned and Operated