FHSA Contribution Limit 2025: How to Save $40K Tax-Free
FHSA Contribution Limit 2025 Fast Facts
Hey there, future homeowner! Remember when saving for a down payment meant choosing between tax benefits now OR tax-free growth? Not anymore.
The First Home Savings Account combines RRSP‑style tax deductions with TFSA‑style tax‑free withdrawals.
Introduced in 2023, the First Home Savings Account lets Canadians tuck away $8,000 per year—up to a lifetime cap of $40,000—and grow it tax‑free until they’re ready to buy a first home.
But there’s so much more to know in 2025, especially with the contribution limits staying steady while housing prices continue their climb.
Let’s break down everything you need to know about the FHSA this year—from contribution limits to withdrawal rules—so you can fast-track your path to homeownership.
FHSA Contribution Limit 2025: What You Can Contribute
The FHSA contribution limit for 2025 remains unchanged at $8,000 per year. This means you can contribute up to $8,000 annually to your FHSA, and any unused contribution room carries forward to future years.
Here’s a quick breakdown of how your contribution room could accumulate if you opened an account when the program launched:
| Year | Annual Limit | Maximum Cumulative Contribution Room |
|---|---|---|
| 2023 | $8,000 | $8,000 |
| 2024 | $8,000 | $16,000 |
| 2025 | $8,000 | $24,000 |
| 2026 | $8,000 | $32,000 |
| 2027 | $8,000 | $40,000 |
The great news? If you haven’t maxed out your contributions in previous years, that room isn’t lost. For example, if you opened an FHSA in 2023 but only contributed $3,000 that year, you’d have $13,000 in contribution room for 2024 ($5,000 carried forward + $8,000 for 2024).
According to the Canada Revenue Agency (CRA), your FHSA contribution limits are tracked similarly to TFSAs, and you can find your available room on your CRA My Account or by calling the Tax Information Phone Service (TIPS).
The Lifetime Contribution Limit Reminder
While the annual contribution limit is $8,000, remember that your lifetime contribution limit is capped at $40,000. This means that even if you spread your contributions over more than five years, you can never contribute more than $40,000 in total.
If you’re wondering how this compares to housing costs—the average home price in Canada as of early 2025 is hovering around $700,000, so the maximum FHSA contribution would cover just under 6% of that purchase price.
That’s why many savvy savers are combining their FHSA with other savings vehicles (more on that later).
The 15-Year Usage Clock: Don’t Miss Your Window
Here’s something crucial that many people overlook: your FHSA has a time limit.
From the moment you open your account, a 15-year clock starts ticking. You must use the funds to purchase a qualifying home or transfer them to an RRSP or RRIF before either:
- The 15-year anniversary of opening your account, or
- The end of the year in which you turn 71
According to the Canada Revenue Agency, if you don’t use your FHSA funds within this timeframe, you have options—but simply cashing out isn’t one of them (at least, not without tax consequences). Your choices at the 15-year mark are:
- Transfer the funds to your RRSP or RRIF (this won’t affect your RRSP contribution room)
- Close the account and include the withdrawn amount in your taxable income
The Department of Finance Canada confirms that these rules are designed to ensure the FHSA serves its intended purpose of helping Canadians purchase their first home, rather than becoming an additional long-term investment vehicle.
Investment Growth Potential: The Power of Tax-Free Compounding
One of the most powerful aspects of the FHSA is that all growth within the account is completely tax-free when used for an eligible home purchase. Unlike an RRSP, where you defer taxes until withdrawal, FHSA withdrawals for a qualifying home purchase are never taxed.
For example, if you contribute the maximum $40,000 and it grows to $50,000 through investments, that entire $50,000 can be withdrawn tax-free for your home purchase.
According to calculations from the Department of Finance Canada, this could mean thousands of dollars in tax savings compared to saving in a non-registered account.
Important Dates for 2025 FHSA Contributors
- December 31, 2025: Deadline to make contributions that count toward your 2025 tax return
- First 60 days of 2026: Unlike RRSPs, FHSA contributions made in the first 60 days of 2026 cannot be claimed on your 2025 tax return
- April 30, 2026: Deadline to file your 2025 tax return and claim the deduction for your FHSA contributions made in 2025
The CRA confirmed these dates remain consistent with previous years, so mark your calendar now to maximize your tax benefits.
FHSA vs. TFSA vs. RRSP (Quick Comparison)
Not sure which savings vehicle is right for your home-buying journey? Here’s a straightforward comparison to help you decide:
| Feature | FHSA | TFSA | RRSP (HBP) |
|---|---|---|---|
| Tax Deductibility | Yes, like an RRSP | No | Yes |
| Withdrawals | Tax-free for home purchase | Always tax-free | Tax-free loan to yourself through HBP, must be repaid |
| Lifetime Caps | $40,000 total | No limit, annual contribution room only | $35,000 withdrawal limit for HBP |
| Best Use Case | Primary saving vehicle for first home | Flexible savings for any goal | Retirement savings with home-buying as secondary benefit |
| Contribution Limits | $8,000 annually | $7,000 annually (2025) | 18% of previous year’s income (up to $31,560 for 2025) |
Need both? Stack them strategically—see our TFSA guide.
Who Can Open an FHSA? Eligibility Checklist
Before you rush to open an account, make sure you qualify. You must be:
- A Canadian resident aged 18–71
- A first‑time home‑buyer, meaning you haven’t owned a home in the current calendar year or the previous four calendar years
- Have a valid Social Insurance Number (SIN)
It’s important to note that the “first-time buyer” definition under the FHSA program is different from some other programs. According to the Canada Revenue Agency, even if you’ve owned property before, you might still qualify if it’s been at least four calendar years since you last owned a home.
Another benefit worth highlighting: spouses or common-law partners can each have their own FHSA, meaning couples can effectively double their savings capacity to $80,000 combined.
The Department of Finance Canada clarifies that there’s no restriction on combining FHSA funds from two individuals for a single property purchase, making this an excellent strategy for couples.
Best FHSA Accounts in Canada (April 2025)
Compare fees in 30 seconds—cut them now, not after you’ve lost five years of growth.
| Provider | Fees | Investment Options | Current Promo |
|---|---|---|---|
| Wealthsimple | No account fees, 0.5-0.7% management fee for roboadvisor | Commission-free ETFs & stocks, managed portfolios | $50 cash bonus |
| Questrade | No annual fee, $0 commission ETF buys (selling costs $4.95-$9.95) | Self-directed stocks, ETFs, bonds; Questwealth portfolios | $25 bonus, auto-investing PACC |
| EQ Bank | No fees | High-interest cash FHSA; 3.00% | Ideal parking lot with higher interest than most big banks |
| RBC | $25 annual fee (waived with certain banking packages) | Mutual funds, GICs, managed portfolios | Integration with RBC banking |
| TD | $25 annual fee (waivable) | Mutual funds, GICs, TD Easy Trade for stocks/ETFs | First year fee waiver |
| BMO | $25 annual fee | Mutual funds, GICs, BMO InvestorLine | Limited time fee waiver |
| Scotiabank | $25 annual fee | Mutual funds, GICs, Scotia iTRADE | Cross-product discounts |
| CIBC | $25 annual fee | Mutual funds, GICs | Fee waiver with selected banking packages |
How to Max Your FHSA in 36 Months (Contribution Playbook)
Want to fast-track your home purchase? Here’s a strategic three-year plan to maximize your FHSA:
- Year 1 – Front-load the full $8,000; invest 70% in an all-equity ETF for maximum growth potential. According to the Department of Finance Canada, the FHSA can hold the same investments as an RRSP, including ETFs, stocks, bonds, and GICs.
- Year 2 – Move your annual tax refund (approximately $2,000-$3,200 depending on your tax bracket) straight into your FHSA, then top up to reach another $8,000. Consider a pre-authorized contribution plan to make regular contributions throughout the year.
- Year 3 – Hit $24,000 total; shift 40% to cash/GIC if your purchase window is less than 3 years away. The CRA notes that your investment strategy should align with your home-buying timeline, with more conservative investments as you get closer to purchase.
If you’re in a higher tax bracket, the tax deduction benefit makes this even more powerful. For someone in a 40% marginal tax bracket, a $24,000 contribution over three years could generate approximately $9,600 in tax refunds—money that can be used for closing costs, furniture, or additional savings.
FHSA Withdrawal & Transfer Rules (Avoid the Tax Traps)
Qualified Withdrawal Checklist
The CRA has specific requirements for tax-free withdrawals from your FHSA:
- You must have a written agreement to buy or build a qualifying home
- The home must be located in Canada
- You must intend to occupy the home as your principal residence within one year of buying or building it
- You must be a first-time home buyer at the time of withdrawal
- The withdrawal must be made within 30 days of taking ownership of the home
According to the Canada Revenue Agency, failure to meet these conditions could result in your withdrawal being fully taxable as income.
RRSP Rollover Option
If you don’t end up buying a home within the 15-year window, don’t worry—you have options. The Department of Finance Canada confirms that you can transfer your FHSA funds to your RRSP or RRIF without affecting your RRSP contribution room.
This is a major benefit compared to simply withdrawing the funds, which would make them fully taxable in the year of withdrawal. The transfer must be completed before your FHSA automatically closes due to reaching the 15-year mark or turning 71.
What Happens on Marriage Breakdown or Moving Abroad
Life happens, and sometimes plans change. The CRA provides guidance for these situations:
- Marriage breakdown: Upon relationship breakdown, FHSA assets can be transferred between spouses tax-free as part of a separation agreement or court order.
- Moving abroad: If you become a non-resident of Canada, you can maintain your FHSA, but you cannot make new contributions. According to the CRA, any withdrawals as a non-resident would be subject to withholding tax, typically at a rate of 25% (though this may be reduced by tax treaties).
Frequently Asked Questions (FAQ)
Yes! This is a powerful strategy confirmed by the Department of Finance Canada. You can withdraw up to $40,000 from your FHSA tax-free AND up to $35,000 from your RRSP under the Home Buyers’ Plan. The difference? HBP withdrawals must be repaid to your RRSP over 15 years, while FHSA withdrawals are completely tax-free with no repayment required
Absolutely. According to the CRA, FHSA contributions are tax-deductible in the year they’re made, reducing your taxable income just like RRSP contributions. This makes the FHSA a dual-benefit account—tax deductions now and tax-free withdrawals later.
The CRA imposes a penalty of 1% per month on excess contributions until they’re withdrawn. This is calculated similarly to TFSA over-contributions. If you notice you’ve over-contributed, withdraw the excess amount as soon as possible to minimize penalties.
As of 2025, most major FHSA providers don’t allow direct cryptocurrency holdings. The CRA considers eligible investments to be similar to those allowed in RRSPs, which generally exclude direct crypto holdings. However, you can invest in crypto ETFs that are qualified investments for registered accounts.
If you move to the US, your FHSA becomes a foreign account subject to US tax reporting requirements. The CRA notes that while you can keep your FHSA, you cannot make new contributions as a non-resident.
The US-Canada Tax Treaty may not provide special treatment for FHSA accounts, potentially leading to US taxation on growth within the account. Consult a cross-border tax specialist before moving.
The FHSA remains one of the most powerful tools for Canadian first-time homebuyers in 2025. With its unique combination of tax-deductible contributions and tax-free withdrawals, it’s essentially the best features of an RRSP and TFSA combined into one home-buying powerhouse.
Whether you’re planning to buy in the next year or five years from now, starting your FHSA contributions today gives you maximum flexibility and tax advantages. Remember, the $8,000 FHSA contribution limit for 2025 is an opportunity you don’t want to miss—especially when every dollar counts in today’s housing market.
