FHSA Explained: Save for Your First Home Tax-Free

Anúncios

Saving a down payment while rent keeps rising is hard. The FHSA gives first-time buyers a tax deduction on the way in and a tax-free withdrawal on the way out.

This guide walks through the rules in order, using the Canada Revenue Agency’s (CRA) own pages, and compares three places to open one, as of September 2026.

Quick answer: A First Home Savings Account lets eligible first-time buyers contribute up to $8,000 a year and $40,000 in total. Contributions are deductible, and a qualifying withdrawal to buy a first home is tax-free. Room only starts when you open the account, so opening early matters. For hands-on investing, Wealthsimple and Questrade offer commission-free stock and ETF trades in an FHSA; for a fixed return, EQ Bank’s FHSA GICs pay 3.70% to 4.25% on 1- to 5-year terms as of September 2026.

Updated on September 23, 2026 · Sources: CRA — FHSA participation room, Wealthsimple, Questrade, EQ Bank

Key takeaways

$8,000 a year, $40,000 lifetime, and up to $8,000 of unused room carries forward.
The FHSA contribution limit only counts from the year you open your first FHSA.
Contributions are deductible; a qualifying withdrawal is tax-free and never repaid.
If you don’t buy, you can move the money to an RRSP or RRIF without tax.

Where to open an FHSA at a glance

Provider	Best for	Key numbers
Wealthsimple	Self-directed, managed or savings	Commission-free trades · savings up to 2.25%
Questrade	Hands-on ETF investors	No commissions · fractional shares from $1
EQ Bank	Short timelines, fixed returns	Savings 1.50% · GICs 3.70%–4.25%

Terms as of September 2026, from each provider’s official page.

Anúncios

Step 1. Confirm you qualify

Under the Income Tax Act rules the CRA administers, you must be a resident of Canada, at least 18 (19 in some provinces) and no older than 71 at the end of the year you open it. You must also be a first-time home buyer: you can’t have lived in a home you or your spouse owned in this calendar year or the previous four.

Step 2. Open the account early

Participation room starts in the year you open your first FHSA. There is no room for earlier years. Opening one with a small deposit starts the clock on $8,000 a year.

Step 3. Contribute by December 31

You can contribute up to $8,000 a year. Unused room carries forward, but only up to $8,000, so the most you can add in one year is $16,000. The CRA taxes any excess FHSA amount at 1% per month. Unlike an RRSP, there is no 60-day grace period in the new year.

Anúncios

Step 4. Match investments to your timeline

Buying within two or three years? Market dips can hit your down payment, so savings or GICs at today’s rates fit better. With a longer horizon, broad ETFs for long-term investors may suit, with more risk.

Step 5. Claim the deduction, now or later

Contributions are deductible in the year you make them or a future year. Waiting for a higher-income year can save more tax. Transfers from an RRSP into your FHSA are not deductible.

Step 6. Make a qualifying withdrawal

To withdraw tax-free, the CRA requires you to fill out Form RC725 and give it to your FHSA issuer. You also need a written agreement to buy or build a qualifying home before October 1 of the year after the withdrawal, and you must plan to live there within one year.

You can use the Home Buyers’ Plan from your RRSP for the same home. Our first-time home buyer guide compares the options, and our list of mortgage rates in Canada helps you price the loan.

Step 7. Have a plan B if you don’t buy

Your FHSA must close by December 31 of the year of the earliest of three events: the 15th anniversary of opening your first FHSA, turning 71, or the year after your first qualifying withdrawal. Before then, you can transfer the balance to an RRSP or RRIF on a tax-deferred basis. A plain withdrawal is taxable income.

Common mistakes

Waiting to open the account, which wastes $8,000 of room each year.
Contributing in January and expecting a deduction for the year before.
Putting a short-term down payment entirely in stocks.
Withdrawing before you have a signed agreement to buy.

Tools and offers that help

1. Wealthsimple FHSA

One app with three ways to hold your FHSA.

Self-directed: buy and sell over 14,000 stocks and ETFs commission-free.
Savings option: open the FHSA as a high-interest savings account earning up to 2.25%.
Managed: a managed portfolio option; check the fee on Wealthsimple’s site.
Transfers: Wealthsimple reimburses transfer-out fees when you move at least $25,000.

Flexible: savings, managed or self-directed in one place.
“Up to 2.25%” means your rate may be lower; confirm yours.

How to open: sign up online or in the app and choose the FHSA account type.

2. Questrade FHSA

A self-directed broker for people who want to pick their own ETFs.

Cost: no commissions on stocks, ETFs and most options.
Fractional shares: Canadian and American companies from $1.
Transfers: transfer fees rebated up to $150 per account.

Low trading costs for a buy-and-hold ETF plan.
You manage the portfolio yourself.

How to open: apply online, then fund the account.

3. EQ Bank FHSA

A digital bank option for savers who want a known return.

FHSA Cash Savings: 1.50%, rates effective September 16, 2026.
FHSA GICs: 3.70% for 1 year up to 4.25% for 5 years; GICs are non-redeemable.
Protection: EQ Bank deposits are eligible for CDIC insurance.

Fixed GIC rates suit a known purchase date.
Not available in Quebec; GIC money is locked until maturity.

How to open: apply online on EQ Bank’s site. Quebec residents need another provider.

Checklist

Confirm the four-year first-time buyer test for you and your spouse.
Open an FHSA this year, even with a small amount.
Contribute up to $8,000 by December 31.
Pick investments that match your purchase date.
Keep Form RC725 and your purchase agreement ready.
Diarize your 15-year closing date.

How we compared

Checked: every fee, rate and feature on September 23, 2026, on each provider’s official page. FHSA rules come from canada.ca (CRA).
Order: no ranking; each option fits a different profile. The Quick answer explains which suits whom.
Criteria: investment choice, trading costs, savings and GIC rates, and transfer costs.
Scope: Canada only.
Independence: no provider paid for placement.

Not financial advice. Rates and terms checked on September 23, 2026 with the CRA and each provider’s official page; confirm before opening an account. Investing involves risk, including loss of principal. Not investment advice. Past returns don’t guarantee future results.

FAQ

What is the FHSA contribution limit for 2026?

$8,000 a year, plus up to $8,000 of unused room from the year before, with a $40,000 lifetime cap.

Can my partner and I both open an FHSA?

Yes, if each of you qualifies. The CRA applies the four-year first-time buyer test to you and your spouse, and participation room is tracked per person.

What form do I need to withdraw?

Form RC725, Request to Make a Qualifying Withdrawal from your FHSA, which you give to your FHSA issuer.

Can I use the FHSA and the Home Buyers’ Plan together?

Yes. The CRA allows both for the same qualifying home, as long as you meet the conditions of each at the time of each withdrawal.

What if I never buy a home?

Transfer the balance to your RRSP or RRIF before the account must close. Withdrawing the cash instead is taxable.

For the full picture, see our hub TFSA / RRSP / FHSA Guide 2026 (CA), our guide to the TFSA limit for 2026 and RRSP deadlines and limits.

Sources

Ieveera SEO is an independent publisher, not a bank or financial advisor; content is for information only and may include paid affiliate links that never affect our rankings — always confirm current rates and terms with the provider. Rates shown in CAD; verify with the issuer. Investing involves risk, including loss of principal. Not investment advice. Past returns don’t guarantee future results.