Buying your first home can feel overwhelming. Between rising prices, down payments, and closing costs, many buyers wonder how they’ll ever save enough to get started.

That’s where the First Home Savings Account (FHSA) comes in. Introduced to help first-time buyers get into the market sooner, the FHSA is one of the most powerful tools available in Canada today.

What Is the FHSA?

The FHSA is a registered savings account designed specifically to help first-time home buyers save for a down payment.

What makes it so powerful is that it combines the best features of an RRSP and a TFSA:

• Contributions are tax-deductible, just like an RRSP

• Withdrawals are completely tax-free (including investment growth) when used to buy a qualifying first home, like a TFSA

In short: you get a tax refund when you contribute, and you pay no tax when you use the money to buy your first home.

FHSA Contribution Limits

There are two key limits to know:

• Up to $8,000 per year

• $40,000 lifetime maximum

You don’t need to contribute the full amount each year, but the earlier you open the account, the sooner you can start accumulating contribution room and investment growth.

Who Is Eligible for an FHSA?

To open and use an FHSA, you must meet all of the following conditions:

• Be a Canadian resident

• Be at least 18 years old

• Be a first-time home buyer

The 15-Year Clock You Need to Know About

Once you open your first FHSA, a clock starts ticking.

You have 15 years to use the account to purchase a qualifying home — or until December 31 of the year you turn 71, whichever comes first.

If you don’t end up buying within that window, the funds can generally be transferred into your RRSP or RRIF without losing their tax-deferred status. Still, the FHSA works best when opened with a clear plan to buy.

Important Deadline: December 31

Here’s a key detail many people miss:

You must open your FHSA before December 31 to generate contribution room for that year.

Even if you don’t have the cash to contribute right away, opening the account early can be a smart move so you don’t lose that year’s $8,000 of potential room forever.

Final Thoughts

The FHSA is one of the most generous tools ever introduced for first-time home buyers — but it only works if you understand it and open it early.

In summary:

• Open the account as soon as you’re eligible

• Invest the funds so they can grow over time

• Combine it with other first-time buyer programs when appropriate

If you’re thinking about buying your first home and want to understand how tools like the FHSA fit into your broader plan, getting advice early can make a huge difference.

For more information on this account and to check if you qualify – check the governments website for all the info: Click Here

If you have any questions or want to chat about potentially buying your first home, reach out!

jonny@donohoe.ca – 604-347-8663