FHSA rules
To open an FHSA, you must be a Canadian resident aged 18 or older. The FHSA can remain open for 15 years, or until the end of the year you turn 71, or until the end of the year following the year in which you make a qualifying home purchase—whichever comes first.
You can contribute up to $8,000 per year toward your FHSA, up to a lifetime limit of $40,000. Unused contribution room is carried forward to the next year. Unlike a TFSA, however, FHSA contribution room only begins to accumulate once you’ve opened the account—it does not automatically begin when you turn 18.
What investments can you hold in an FHSA?
In Canada, there are limitations on the types of investments you can hold in registered accounts. The federal government has stated that the qualified investments for an FHSA will be the same as those for a TFSA. This means you will be able to hold:
- Mutual funds
- Publicly traded securities (such as stocks and exchange-traded funds)
- Government and corporate bonds
- Guaranteed investment certificates (GICs)
You can’t hold the following investments in your FHSA:
- Land
- Shares of private corporations
- General partnership units
Read: “What can I hold in an FHSA?”
What happens to the money in an FHSA if you don’t buy a home?
If you decide not to use money in an FHSA for a home purchase—you may decide that renting is better for you, you live with someone who already owns their place, or you inherit real estate—you can transfer the funds to an RRSP or a registered retirement income fund (RRIF) without being penalized or affecting your RRSP contribution room. In essence, the FHSA creates additional RRSP contribution room, up to $40,000, for all Canadians.
However, keep in mind that an FHSA withdrawal used for a home purchase is not taxed, whereas funds withdrawn from an RRSP or RRIF are taxed.
Using an FHSA with other accounts and home-buying programs
When buying your first home, you can use the FHSA with the Home Buyers’ Plan (HBP), which allows you to borrow up to $35,000 from your RRSP. And when buying a home jointly with another person, you can combine your FHSA and HBP withdrawals for a sum of at least $80,000 from your FHSAs and $70,000 through the HBP, for a total of $150,000. That’s equal to a 20% down payment on a home priced at $750,000. This is why the FHSA was created—to make buying a home more accessible for those wanting to get on the real estate ladder (more info below).
Justin Dallaire
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