What Is the FHSA? How to Save $40,000 Tax-Free Toward Your First Home in London, Ontario
Combine it with the Home Buyers' Plan and a couple can bring up to $200,000 in tax-sheltered savings to the table — here's exactly how the math works.
An RRSP and a TFSA had a baby, and it's built for buying a house
The First Home Savings Account does something no other registered account in Canada does: it gives you a tax deduction going in, tax-free growth while it sits, and a tax-free withdrawal coming out — as long as the money goes toward a qualifying first home.
Contribute this year and you lower your taxable income the same way an RRSP contribution would. Everything the account earns while invested stays untouched by tax. And when you're ready to buy, the withdrawal — principal and growth — comes out with zero tax owing. There is no other savings vehicle in the country that stacks all three of those benefits in one place.
A couple who each max out their FHSA and pair it with the Home Buyers' Plan can bring more than $200,000 in tax-sheltered savings to their first home purchase.
The $8,000 annual limit, the $40,000 lifetime cap, and how carry-forward works
You can contribute up to $8,000 per calendar year, to a lifetime maximum of $40,000. Contribute less than the full $8,000 in a given year and the unused room carries forward — but only up to $8,000 at a time. Open the account and put nothing in for a year, and the next year you can contribute up to $16,000.
$8,000
Maximum contribution per calendar year, fully tax-deductible.
$40,000
Total contribution room across the life of the account.
$8,000
Unused room rolls to the following year, up to this cap.
Stacking the FHSA with the $60,000 Home Buyers' Plan
Here's where it gets interesting. The FHSA doesn't have to stand alone — you can pair a qualifying FHSA withdrawal with a Home Buyers' Plan withdrawal from your RRSP, for the same home purchase, at the same time.
The HBP currently lets a first-time buyer withdraw up to $60,000 from their RRSP tax-free. Unlike the FHSA, that money has to be repaid to your RRSP over 15 years — but it's still an interest-free loan from your future self. Put the two together and a single buyer can bring $40,000 (FHSA) plus $60,000 (HBP) — $100,000 — to their down payment. Buying with a partner who also qualifies, and both of you maxing both accounts, and you're looking at up to $200,000 in combined tax-sheltered purchasing power.
Where FHSA and RRSP rules diverge — and where buyers get caught
The FHSA and the RRSP look similar on the surface, but the deadlines and penalties don't line up, and that's where we see buyers get tripped up.
Deadline
FHSA contributions must land by December 31 to count for that tax year — unlike RRSPs, there's no first-60-days window.
1% / month
Excess FHSA contributions are penalized from the first month over — there's no $2,000 cushion like the RRSP allows.
15 years
HBP withdrawals must be repaid to your RRSP starting the second year after withdrawal — miss a payment and it's added to your taxable income.
Compounding early is the fastest path to an entry-level home here
London's benchmark home price sat at $570,000 in May, still down roughly 4% from a year ago, with the resale market continuing its slow stabilization. A first-time buyer targeting a townhouse or condo — where benchmark values in this market are running well under that figure — can realistically close much of the down payment gap using the FHSA and HBP together, without touching a line of credit or leaning on family.
The account only starts accumulating room from the year you open it. Even if you're not ready to contribute meaningfully yet, opening an FHSA today locks in that year's $8,000 of room so it's already carrying forward when you are ready.
The Bigger Picture: Rates, National Market Context & Buyer Incentives
- Bank of Canada: The overnight rate has held at 2.25% since October 2025, with the Bank favouring stability amid ongoing global uncertainty. Its next scheduled announcement is July 15, 2026.
- CREA national outlook: CREA's most recent forecast projects the national average home price rising roughly 2.8% in 2026, with activity strengthening as sellers' and buyers' price expectations move closer together.
- HBP enhancement: The Home Buyers' Plan withdrawal limit was raised from $35,000 to $60,000, giving first-time buyers materially more RRSP-sourced down payment room than in past years.
- London & Middlesex context: Local benchmark and average prices remain well off the 2022 peak, which — combined with steady rates — has created a window where tax-sheltered savings strategies stretch further than they have in several years.
The FHSA rewards buyers who start early — even before they're ready to buy
Whether you're a year out or five years out from purchasing your first home in London or Middlesex County, opening an FHSA today and understanding how it stacks with the Home Buyers' Plan is one of the highest-leverage moves available to a first-time buyer in this market.
Visit Us Online at www.ryanandsandra.caRyan Hodge & Sandra Tavares
The Realty Firm Inc. Brokerage
519-601-1160
ryan@therealtyfirm.ca
www.ryanandsandra.ca
734 Wellington Street, London, Ontario N6A 3S4
Awards & Reviews
Sources: Canada Revenue Agency (Home Buyers' Plan & FHSA rules), Bank of Canada (policy rate announcements), Canadian Real Estate Association (national forecast), London and St. Thomas Association of REALTORS® (LSTAR, May 2026 statistics). Program rules and figures accurate as of July 2026 and subject to change — consult a tax professional for advice specific to your situation.
