Updated: April 2025  |  bremo.io financial guides

FHSA Investing Canada 2025 — First Home Savings Account Guide

The First Home Savings Account (FHSA) launched in Canada in 2023 and is arguably the best deal in Canadian personal finance for eligible first-time home buyers. It combines the best features of the RRSP (deductible contributions) and the TFSA (tax-free withdrawals) specifically for a first home purchase.

FHSA Basics

• Annual contribution limit: $8,000
• Lifetime contribution limit: $40,000
• Carry-forward: Up to $8,000 of unused room carries forward to the following year (but no further)
• Tax deduction: Contributions are deductible from income (like RRSP)
• Tax-free withdrawal: Qualifying withdrawals for a first home are completely tax-free (like TFSA)
• Account lifespan: Maximum 15 years after opening, or until you turn 71

Who Qualifies for an FHSA?

• Canadian resident aged 18+
• Have not owned a qualifying home as a principal residence in the current year or the preceding four calendar years
• Have a SIN

What to Invest in Your FHSA

FHSA investment choices depend entirely on your home purchase timeline:

• Under 2 years: HISA or short-term GIC inside the FHSA — preserve capital
• 2–5 years: GIC ladder or conservative balanced ETF (VBAL, XCNS)
• 5+ years: Diversified equity ETF (VGRO, XGRO) — growth with time to recover from volatility

FHSA + RRSP HBP Combination

You can combine FHSA withdrawals with the RRSP Home Buyers' Plan. A couple buying a home together could access:

• Partner 1: $40,000 FHSA + $60,000 RRSP HBP = $100,000
• Partner 2: $40,000 FHSA + $60,000 RRSP HBP = $100,000
• Total: Up to $200,000 in combined down payment savings

What If You Don't Buy a Home?

If you don't use your FHSA for a qualifying home purchase within 15 years, you can transfer the balance to your RRSP or RRIF without triggering immediate tax and without using RRSP contribution room. The tax deduction benefit is retained. This makes opening an FHSA very low-risk even for those unsure about home ownership.

Open Your FHSA as Early as Possible

Contribution room only accrues from the year you open the account — not from birth like TFSA room. If you're eligible and might ever want to buy a home, open an FHSA immediately. You can contribute $8,000 in year one and carry forward $8,000 to year two for $16,000 in the first year with carry-forward.