If you’re saving for your first home — or watching your adult kids try to — there’s a relatively new account designed exactly for that job, and many Canadians still haven’t opened one.

The First Home Savings Account (FHSA), available since 2023, combines the best parts of an RRSP and a TFSA for one purpose: buying your first home. Contributions are tax-deductible like an RRSP, and a qualifying withdrawal toward your first home comes out completely tax-free like a TFSA. No other account gives you both.

Here are the rules that matter:

• $8,000 per year of new contribution room, up to a $40,000 lifetime limit per person.
• Unused room carries forward, so you can contribute up to $16,000 in a catch-up year.
• The account must be closed 15 years after opening (or the year you turn 71) — the clock starts when you open it, not when you contribute, so opening one early even with a small deposit can be smart.
• You need to be a first-time buyer to open one at all — neither you nor your spouse can have owned a home you lived in during the current year or the previous four calendar years. The same test applies again when you make a qualifying withdrawal.

A couple planning together is especially powerful: each partner gets their own $40,000 of lifetime room, so a household can shelter up to $80,000 of down-payment savings with a tax deduction on the way in and zero tax on the way out.

The part people get wrong is the room math. Your available room this year depends on when you opened the account, what you’ve already contributed, and how much unused room carried forward — and the CRA’s annual statement doesn’t always make that obvious. Contribute more than your available room and you face a 1%-per-month penalty on the excess.

That’s why I built our FHSA Home Purchase Planner. It tracks your per-person room (including carryforward and the lifetime cap), projects your down payment with investment growth, layers in TFSA or other savings, and estimates BC closing costs including the property transfer tax. Planning with a partner? It models both of your FHSAs side by side — each with their own $40,000 of lifetime room and carryforward — so you can see your combined down payment. You can run it monthly or annually, and save your scenario with a shareable link.

Whether it’s your own first home or you’re helping your adult children get started, the FHSA rewards starting early — every year you wait is $8,000 of room you have to play catch-up on later. If you’d like a second pair of eyes on your down-payment plan, or want to talk through how the FHSA fits with your RRSP and TFSA, I’m happy to help. Get in touch — no obligation, just a conversation about getting you (or them) into that first home.