The path to owning your first home can feel daunting—especially when saving for a down payment. In response, Canada introduced the First Home Savings Account (FHSA) in 2023 to help first-time buyers overcome financial hurdles. If you're planning to buy your first home in Ottawa or anywhere in Canada, understanding the FHSA can give you a meaningful edge.
What is the FHSA?
The First Home Savings Account (FHSA) is a registered savings account designed exclusively for first-time homebuyers. It combines features from RRSPs and TFSAs—offering both tax-deductible contributions and tax-free withdrawals—to maximize your ability to save for a qualifying home purchase.
Key Benefits of the FHSA
1. Tax-Deductible Contributions
You can contribute up to $8,000 per year, with a lifetime maximum of $40,000. Like RRSPs, contributions are tax-deductible, lowering your taxable income and potentially resulting in a tax refund each year you contribute.
2. Tax-Free Growth
Savings and investment growth inside an FHSA are not subject to tax. Whether you invest in GICs, stocks, bonds, or mutual funds, your money grows tax-free until you're ready to buy.
3. Tax-Free Withdrawals
When you withdraw funds from your FHSA for a qualifying first home purchase, you pay no tax—making every dollar saved go directly toward your down payment.
4. Flexible Investment Options
Most major banks, credit unions, and brokerages offer FHSAs with a range of investment choices. This flexibility empowers you to build your down payment at your own pace, with investments suited to your risk appetite.
5. Account Transfers and Coordination
Unused FHSA savings can be transferred to your RRSP or RRIF without penalty if you don't end up buying a home. You can also combine FHSA withdrawals with the RRSP Home Buyers' Plan (HBP) for even bigger down payment power.
Who is Eligible?
Eligibility Requirements:
To qualify, you must:
- Be a resident of Canada age 18 or older
- Be considered a first-time homebuyer (not owned a home in the current year or previous four years)
Why Ottawa Buyers Should Consider an FHSA
Ottawa's competitive housing market means every dollar counts. By maximizing your FHSA, first-time buyers can:
Ottawa-Specific Benefits:
- Save faster and more tax-efficiently
- Increase purchasing power and reduce financial stress
- Combine benefits with other programs for a larger down payment
How to Get Started
Open an Account
Open an FHSA at your preferred financial institution
Set Up Contributions
Set up regular contributions (even small monthly deposits add up over time)
Explore Investments
Explore investment options within the account for optimal growth
Coordinate Planning
Coordinate with your realtor or financial advisor to plan your withdrawal when you're ready to buy
Final Thoughts
The FHSA is a powerful tool for first-time buyers looking to break into Ottawa's—and Canada's—housing market. Take advantage of tax savings and dedicated down payment growth to unlock the door to your new home, sooner.
Ready to start? Open an FHSA, set your savings goal, and make homeownership your reality!