First Home Savings Account (FHSA)

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What is an FHSA?

This new account is a great savings vehicle for your homebuying goals because you never pay a tax bill on these savings.*

It's the best part of both a Registered Retirement Savings Plan (RRSP), which gives you tax-deduction perks, and a Tax-Free Savings Account (TFSA), which lets your investments grow without a tax bill. This means that the money you put in and earn in this account goes towards the down payment of your first home.

Benefits of a FHSA

Any investment income earned within the FHSA is tax free.

Tax deductible contributions and non-taxable withdrawals.

Helps you save for a home down payment.

If you do not use the FHSA to purchase a home, investments can be transferred to an RRSP.

Make the most of your FHSA

Why invest in an FHSA?

The First Home Savings Account (FHSA) is a registered investment account that can help Canadians contribute up to $40,000 for their first home.

Any growth from your investments is tax-free. Contributions you make to your FHSA can also reduce your taxable income.*

Who’s eligible for the FHSA?

There are three important components to qualify for this investment vehicle:

You need to be a resident of Canada
You have to be at least 18 years of age (or the age of majority in your province or territory)
You or your spouse can't own a home in which you lived, at any time in the year the account is opened or during the previous four calendar years

How can an FHSA be used?

Your FHSA is a registered account that can hold a variety of savings and investment products within that account, such as cash, GICs, mutual funds, and even stocks and bonds.

What are the contribution limits?

Every year you gain contribution room in your FHSA. As of April 2023, you can contribute $8,000 annually in your FHSA. However, it’s important to make sure you don’t over-contribute.^††

Is this Registered Plan right for you?

Right for you if you:

Are a Canadian Resident
Have reached the age of majority in the province where the account is set-up
Are a First Time Home Buyer
Want your savings to grow over time with the ability to withdraw all of the funds tax-free to buy your first home

May not be right for you if you:

Are not a first-time home buyer*
Are not a Canadian Resident
Are turning 72 this year -since you can only hold and contribute to a FHSA until the year in which you turn 71

Frequently Asked Questions

If you fit the three requirements, you likely qualify. But if you are looking to buy a second home or a new home as a previous homeowner, this account isn't for you.

You are considered a first-time homebuyer, for the purposes of this plan, if you haven’t owned a home within the last four calendar years.

For example, if you bought your first home in 2015 and sold it in 2018 and have been renting or living with parents or a non-spouse ever since, you would be considered a first-time homebuyer again.

If you don't use your FHSA to buy a home, you can transfer the funds to an RRSP account anytime within 15 years or at the time you need to close your account. The transfers will not impact your RRSP’s contribution room.

Alternatively, you can withdraw the amount, but the funds would be subject to withholding taxes.

If you are planning to buy a home in the next few years and don’t have enough time to earn the maximum amount of $40,000 in the FHSA, you still could still use your savings from the account in combination with the other new tax proposals.

The federal government also announced that the First-Time Home Buyers' Tax Credit will increase to $10,000, which provides up to $1,500 in direct homebuyer support.^**

Plus, the First-Time Homebuyer Incentive, which allows new owners to lower their monthly payments, has been extended until March 31, 2025.

The FHSA in Canada is the best of both worlds.

Like your TFSA, the maximum contribution of $40,000 ($8,000 each year) will compound and grow tax-free. But unlike the TFSA, you don't have the same flexibility for how you will use your savings.

The FHSA has to be devoted to the purchase of your first home. Any withdrawals not related to buying a home, will not meet the criteria of a qualifying withdrawal, and therefore will be taxed.

Right now, you can withdraw up to $60,000 of your RRSP towards a new home (called the Home Buyers’ Plan) tax free. The catch is that with the RRSP, you have to pay that money back within 15 years. With the FHSA, you won't need to replace those funds.

Take a look at the breakdown on how these accounts work.

	FHSA	TFSA	RRSP	RRSP - Home Buyers’ Plan
Who qualifies for the account?	Any Canadian resident over 18 years old (or age of majority in your province), as long as they haven’t owned a home in the current year or previous 4 years	Any individual 18 years old (or age of majority in your province) or older who has a valid social insurance number (SIN)	Any Canadian resident or non-resident under the age of 71¹	Any Canadian resident under the age of 71¹
Tax-deductible contributions?	Yes	No	Yes	Yes
Tax-free withdrawals?	Yes^2,3	Yes	No	Yes^4,5
Max contribution limit?	$8k per year until $40k max^3,6	Subject to Canadian Revenue Agency (CRA) regulations	Subject to CRA's regulations	n/a
Deadline to close account?	December 31of the year of the account’s 15^th anniversary or when the plan holder turns 71, whichever happens first.²The account must also be closed within one year of the first qualifying withdrawal.	n/a	December 31 of the year you turn 71 is the last day you can contribute to the account	n/a

Building your FHSA

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How to save for a down payment towards a home as a newcomer

New to Canada and want to buy a home? Here's how to save for your down payment.

Understanding FHSA contribution limits

How you can use the FHSA properly to save toward your first home.

How the Home Buyers' Plan (HBP) can help you become a homeowner

Learn how the Home Buyers' Plan lets you use your RRSP to help pay for your first home.

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Additional information

FHSA Resource
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Terms and conditions

Full terms and conditions can be found here: https://www.scotiabank.com/ca/en/personal/investing/campaigns/investment-offer.html

If you remove funds from the FHSA for any reason other than for a qualifying home purchase, you will have to pay taxes. You will be considered to be a first time home buyer if you did not, at any time in the current calendar year before the account is opened or at any time in the preceding four calendar years live in a qualifying home as your principal residence that either you or your spouse or common law partner owned or jointly owned.

††

If you over-contribute to your FHSA, then the excess amount will be taxed at 1% for every month it’s in your FHSA.

First-Time Home Buyers’ Tax Credit (HBTC), Government of Canada

You must be considered a first-time home buyer, you must have a written agreement to buy or build a qualifying home, either for yourself or for a related person with a disability, you must be a resident of Canada when you withdraw funds from your RRSPs under the HBP and up to the time a qualifying home is bought or built and you must intend to occupy the qualifying home as your principal place of residence within one year after buying or building it.

After making a withdrawal to purchase a home, an individual will be required to close their FHSAs within one year and will not be permitted to open another FHSA.

A customer along with their spouse or common law partner can use their TFHSA towards the purchase of the same house if they both meet the first-time house buyer criteria.

This applies to withdrawals made after March 19, 2019. Amounts withdrawn under the HBP must be repaid to an RRSP over a period not exceeding 15 years, starting the second year following the year in which the withdrawal was made.

HBP will continue to be available, under which an individual may withdraw up to $60,000 tax free from an RRSP to purchase or build a home, on the condition that amounts withdrawn be repaid to the RRSP over a period not exceeding 15 years. First-time home buyers who withdraw money from their RRSPs between January 1, 2022, and December 31, 2025, will have five years instead of two, to begin repayments over a period not exceeding 15 years.

Individuals would be allowed to transfer funds from an RRSP to an FHSA on a tax-free basis, subject to the $40,000 lifetime and $8,000 annual contribution limits. These transfers would not restore an individual’s RRSP contribution room.

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