What a first home savings account is and who can open one
A first home savings account (FHSA) is a registered account that lets you set aside money tax-free specifically to buy your first home. The account works like a registered retirement savings plan (RRSP) in one key way: money you put in reduces your taxable income for that year, and the growth inside the account is not taxed. Unlike an RRSP, you do not pay tax when you withdraw the money — as long as you use it to buy a first home.
You can open an FHSA if you are a Canadian resident, at least 18 years old, and have never owned a principal residence (a home you lived in) in Canada. If you are married or in a common-law partnership, your spouse or partner must also meet the first-time buyer requirement. The account has an annual contribution limit — this varies by year, so check with your financial institution for the current amount. You can carry forward unused contribution room to future years.
The account is offered by banks, credit unions, investment firms, and insurance companies. You do not need to have an existing account with them to open one, though some institutions may require you to open a chequing or savings account at the same time.
Key Takeaways
- Money you contribute to an FHSA reduces your taxable income that year, and withdrawals for a first home purchase are tax-free.
- You must be a first-time home buyer in Canada, at least 18, and a Canadian resident to open an account.
- You can open an FHSA at any bank, credit union, investment firm, or insurance company that offers them.
- Contribution limits reset each year and unused room carries forward, so you can catch up in later years if you do not contribute immediately.
- You have up to 15 years to use the money for a home purchase before the account must be closed or the balance becomes taxable.
Step-by-step process to open an account
Start by choosing a financial institution. Compare the investment options they offer inside the account — some let you hold cash only, others let you buy stocks, bonds, mutual funds, or exchange-traded funds (ETFs). If you want to invest the money rather than leave it in cash, pick a place that offers the products you want. You can open an account online, by phone, or in person at a branch.
Gather your identification before you apply. You will need a government-issued photo ID (passport, driver's license, or provincial ID card) and proof of your Social Insurance Number (SIN). Some institutions also ask for proof of address, such as a recent utility bill or lease agreement. Have these documents ready whether you are applying online or in person.
Fill out the account application form. The institution will ask your name, date of birth, SIN, address, employment information, and whether you have ever owned a principal residence in Canada. Answer the home ownership question truthfully — the institution reports this information to the Canada Revenue Agency (CRA), and false claims can result in penalties and loss of the tax benefit.
Review the account agreement and sign it. This document explains the terms, fees, investment options, and withdrawal rules. Once you sign, the account is open and you can begin contributing.
Where to open an account and what to compare
The major Canadian banks (Royal Bank, TD, Scotiabank, BMO, CIBC) all offer FHSAs. Credit unions in your province may also offer them, often with lower fees. Online banks like Tangerine, EQ Bank, and Wealthsimple offer accounts with minimal fees and straightforward interfaces. Investment firms like Questrade and Interactive Brokers cater to people who want to build a diversified portfolio inside the account.
Compare three things: the investment options available, the fees charged, and the minimum balance required. Some institutions charge an annual account fee (typically $0 to $50), a per-transaction fee if you buy and sell investments, or a percentage-based management fee if they manage the account for you. Others charge nothing. If you plan to hold cash or a few mutual funds, a low-cost option like an online bank may be best. If you want to actively trade stocks or ETFs, an investment firm with low trading commissions makes more sense.
Check whether the institution allows transfers in from other accounts. If you already have money saved elsewhere, you may be able to move it into the FHSA without triggering a taxable event, depending on the source.
What documents you need to provide
You will need a government-issued photo ID (passport, driver's license, or provincial ID card) to prove your identity and age. The institution also requires your Social Insurance Number (SIN) or a document showing it, since the CRA tracks the account and your contribution room. Most institutions ask for proof of address dated within the last 90 days — a utility bill, lease agreement, mortgage statement, or bank statement all work. Some also request employment information, such as your employer's name and address or self-employment details, for account verification and risk assessment.
If you are applying online, you will usually upload scans or photos of these documents. If you are applying in person or by phone, bring the originals or certified copies. The institution will verify the information with the CRA before finalizing the account. Keep copies of everything you submit for your own records.
| Document Type | What It Is | Why It Is Needed |
|---|---|---|
| Government-issued photo ID | Passport, driver's license, or provincial ID card | Proves your identity and age (must be 18 or older) |
| Social Insurance Number (SIN) | Your nine-digit SIN or a document showing it | Required to report the account to the CRA and track contribution room |
| Proof of address | Utility bill, lease, mortgage statement, or bank statement dated within the last 90 days | Confirms your current residence for tax purposes |
| Employment information (sometimes) | Employer name and address, or self-employment details | Used for account verification and risk assessment |
How to make your first contribution
Once the account is open, you can contribute money immediately. You can deposit a lump sum, set up automatic monthly transfers from your chequing account, or both. The contribution is deductible on your tax return for the year you make it, so if you contribute in 2024, you claim the deduction on your 2024 tax return filed in 2025.
Keep track of how much you contribute each year. The CRA tracks your contribution room and will send you a notice of assessment showing your available limit. If you contribute more than your limit, the excess is subject to a 1% penalty per month until you withdraw it. You can check your contribution room through My Account on the CRA website using your online banking credentials.
If you have unused contribution room from previous years, you can catch up by contributing more in a later year. For example, if you did not contribute in 2023 but open an account in 2024, you can contribute the 2023 limit plus the 2024 limit in 2024 if you have the funds available.
Timeline from application to first deposit
Opening an account online typically takes 24 to 48 hours. The institution verifies your identity and SIN with the CRA, and once approved, sends you confirmation and login credentials. You can then deposit money the same day or the next business day, depending on the method. A bank transfer from your chequing account at the same institution is usually instant. A transfer from another bank takes one to two business days.
In-person applications at a branch are often faster — you can sometimes open the account and make your first deposit on the same day. By phone, the process usually takes three to five business days because the institution needs to mail you documents to sign and return, or arrange a callback to complete the application.
Once money is in the account, it is available to invest immediately if you choose to buy mutual funds or stocks. If you are holding cash, it sits in the account earning whatever interest rate the institution offers (usually 4% to 5% annually at online banks, lower at traditional banks).
What happens when you buy your first home
When you find a home and are ready to close the purchase, you can withdraw money from your FHSA tax-free. The withdrawal must be used to buy a principal residence — a home you will live in, not an investment property or cottage. You must complete the purchase within a certain timeframe after the withdrawal (usually within a year, but check your institution's rules).
To withdraw, contact your financial institution and request a withdrawal for a first home purchase. You will need to provide proof of the purchase, such as a signed purchase agreement or closing documents. The institution sends the money directly to you or to your lawyer, depending on how you arrange it. There is no tax on the withdrawal, and it does not affect your income for that year.
If you do not buy a home within 15 years of opening the account, the remaining balance must be withdrawn and becomes taxable income. You can roll the balance into an RRSP if you have contribution room, which defers the tax, but eventually you will need to either buy a home or pay tax on the money.
Common mistakes to avoid when opening an account
Do not claim home ownership you do not have. If you have ever owned a principal residence in Canada — even if you sold it years ago or it was jointly owned with an ex-partner — you are not a first-time buyer and cannot open an FHSA. The CRA verifies this information, and false claims result in penalties and loss of the tax deduction.
Do not ignore your contribution limit. Contributing more than your annual limit triggers a 1% monthly penalty. Check your CRA notice of assessment or My Account each year to see your available room before you contribute.
Do not assume all institutions offer the same investments. Some offer only cash and GICs (may provide investment certificates). Others offer a full range of stocks and funds. If you want to invest aggressively, make sure the institution you choose supports that before you open the account.
Do not forget to claim the deduction on your tax return. Opening an account and contributing does not automatically reduce your taxes — you must report the contribution on your tax return. If you use tax software or file with an accountant, make sure they know about the FHSA contribution.
Frequently Asked Questions
Can I open an FHSA if I own a cottage or investment property?
No. The rule is whether you have ever owned a principal residence — a home you lived in — not whether you own any property. If you own a cottage or rental property but have never owned a home you lived in, you can open an FHSA. If you own a principal residence now or have owned one in the past, you cannot.
What if I get married or move in with a partner after I open the account?
Your account remains yours and is not affected by changes in your relationship status. However, if your spouse or partner wants to open their own FHSA, they must also be a first-time buyer. If they have owned a principal residence in Canada, they cannot open an account.
Can I withdraw money from my FHSA for something other than buying a home?
You can withdraw money at any time, but if you do not use it to buy a first home within the allowed timeframe, the withdrawal is taxable as income. The tax is calculated at your marginal rate for that year. It is designed as a savings account for home purchase, not a general savings account.
How much can I contribute each year?
The annual limit changes each year and is indexed to inflation. Check with your financial institution or the CRA website for the current year's limit. Unused contribution room carries forward, so if you do not contribute the full amount one year, you can contribute more in a later year.
Do I need to have a job to open an FHSA?
No. You need a Social Insurance Number and Canadian residency, but employment is not required. Students, self-employed people, and those between jobs can all open an account. You do need income to contribute money, but the source of that income does not matter.