FHSA (First Home Savings Account)

What it means

A First Home Savings Account is a registered Canadian account designed specifically for first-time home buyers. Contributions are tax-deductible like an RRSP, and — unlike an RRSP — qualifying withdrawals to buy a first home are completely tax-free, with nothing to repay afterward.

Why it matters

It's the rare case of getting both benefits at once: a deduction now and tax-free growth and withdrawal later, which usually makes it the first place to save for a down payment before an RRSP or a taxable account.

Common misunderstandings

• •It has an annual contribution limit ($8,000) and a lifetime limit ($40,000) — it isn't unlimited, and unused annual room only carries forward up to $8,000 at a time.
• •It isn't automatically better than the RRSP Home Buyers' Plan for everyone — the two can also be combined, which is often the stronger strategy.
• •Unused funds can be transferred to an RRSP without affecting RRSP contribution room if a home purchase doesn't end up happening.

Where you'll see it

In any first-time home buyer conversation, usually alongside the RRSP Home Buyers' Plan and the TFSA.