Costs and closing
First Home Savings Account (FHSA)
A registered account for first-time buyers: $8,000 a year up to a $40,000 lifetime cap, deductible going in and tax-free coming out.
Also called FHSA.
The FHSA combines the best part of an RRSP with the best part of a TFSA. Contributions are deductible from your income like an RRSP, and qualifying withdrawals for a first home are tax-free like a TFSA, with no repayment required.
The limit is $8,000 a year up to a lifetime maximum of $40,000. Unused room carries forward, but only once the account is open, so it's worth opening one even if you can't contribute yet. Two first-time buyers can hold $80,000 between them.
It stacks with the RRSP Home Buyers' Plan. A couple using both could put $80,000 of FHSA funds and $120,000 of HBP withdrawals toward the same purchase.
If you don't buy, you can transfer the balance to an RRSP without using RRSP contribution room, so opening one early has almost no downside.
Related terms
RRSP Home Buyers' Plan (HBP)
A program that lets a first-time buyer withdraw up to $60,000 from an RRSP tax-free for a home, repayable over 15 years.
Down payment
The cash you put into the purchase: 5% up to $500,000, 10% on the portion to $1.5M, and 20% above that.
First-time home buyer
For most federal programs, someone who hasn't owned a home they lived in during the current year or the 4 preceding calendar years.
This definition describes how the term is used in Canadian residential mortgage lending. It’s general information, not advice on your file. Rules, thresholds and rates change. Where a figure is quoted, it’s current as of the date shown on the related guide.
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