FHSA Withdrawal Rules
The First Home Savings Account (FHSA) allows tax-free withdrawals to purchase your first home. Here’s how it works. For the broader account strategy before withdrawal, see FHSA vs TFSA vs RRSP.
Qualifying Withdrawal Requirements
To make a tax-free qualifying withdrawal:
| Requirement | Details |
|---|---|
| First-time buyer | Not owned a home you lived in during current year or 4 preceding years |
| Canadian resident | Must be resident when withdrawing |
| Written agreement | Signed agreement to buy or build qualifying home |
| Home location | Must be in Canada |
| Principal residence | Intent to occupy within 1 year |
| Timeline | Occupy home by October 1 of year after withdrawal |
First-Time Buyer Definition
You qualify as a first-time buyer if:
| Scenario | Qualifies? |
|---|---|
| Never owned a home | ✓ Yes |
| Owned 5+ years ago (lived in it) | ✓ Yes |
| Owned investment property (never lived in it) | ✓ Yes |
| Spouse owned 5+ years ago | ✓ Yes |
| Owned 3 years ago | ✗ No |
| Spouse currently owns | ✗ No |
Key: You and your spouse/common-law partner must both be first-time buyers.
Withdrawal Process
If you are combining FHSA and RRSP funding for a purchase, compare these rules with FHSA vs RRSP HBP.
Step 1: Sign a Purchase Agreement
Before withdrawing, you need a written agreement to buy or build a qualifying home.
Step 2: Request Withdrawal
- Complete Form RC725 (Request to Make a Qualifying Withdrawal from your FHSA)
- Submit to your FHSA issuer (financial institution)
- Funds released to you tax-free
Step 3: Buy and Occupy the Home
- Complete the purchase
- Move in within 1 year of purchase
- Must occupy as principal residence by October 1 of year following withdrawal
Timelines
| Event | Deadline |
|---|---|
| Withdrawal | Before or within 30 days after closing |
| Purchase closing | Within 30 days after first withdrawal |
| Occupy as principal residence | By October 1 of year after withdrawal |
| FHSA account closure | After all funds withdrawn/transferred |
Partial Withdrawals
You can make multiple qualifying withdrawals over time:
| Withdrawal | Amount | Running Total |
|---|---|---|
| March 2026 | $20,000 | $20,000 |
| June 2026 | $15,000 | $35,000 |
| August 2026 | $5,000 | $40,000 |
All withdrawals must meet the qualifying requirements.
Non-Qualifying Withdrawals
If you withdraw without meeting the requirements:
| Type | Tax Treatment |
|---|---|
| Qualifying withdrawal | Tax-free |
| Non-qualifying withdrawal | Taxable as income |
Example
| Scenario | $40,000 Withdrawal |
|---|---|
| Qualifying (first home) | $0 tax |
| Non-qualifying (40% bracket) | $16,000 tax |
Avoid non-qualifying withdrawals — you lose the tax benefit.
What If I Don’t Buy a Home?
If you don’t make a qualifying withdrawal, you have options:
Option 1: Transfer to RRSP/RRIF (Tax-Free)
- No tax on transfer
- No RRSP room required
- Taxed when eventually withdrawn from RRSP/RRIF
| FHSA Balance | Transfer to RRSP | Tax Now | Tax Later |
|---|---|---|---|
| $40,000 | $40,000 | $0 | On withdrawal |
Option 2: Withdraw as Taxable Income
- Full amount taxable
- Added to your income for the year
- Not recommended if avoidable
| FHSA Balance | Withdrawal | Tax (40% bracket) |
|---|---|---|
| $40,000 | $40,000 | $16,000 |
That rollover option matters most if you already understand your future RRSP strategy, so this page pairs well with RRSP withdrawal rules Canada.
Account Closure Deadline
Must close FHSA by the earliest of:
- December 31 of the 15th year after opening
- December 31 of year you turn 71
- December 31 of year following first qualifying withdrawal
FHSA vs Home Buyers’ Plan (HBP)
| Feature | FHSA | HBP (RRSP) |
|---|---|---|
| Max withdrawal | $40,000 | $60,000 |
| Repayment required | No | Yes (15 years) |
| Tax on withdrawal | Tax-free | Tax-free |
| Can use both | Yes | Yes |
| Total combined | $100,000 | (per person) |
Using Both FHSA and HBP
You can withdraw from both:
| Source | Amount |
|---|---|
| FHSA | $40,000 |
| HBP | $60,000 |
| Total | $100,000 |
For couples, that’s up to $200,000 combined.
If you need the higher-level first-home account comparison, our FHSA calculator and TFSA vs RRSP for beginners pages help frame the tradeoff.
Common Questions
Can I use FHSA for a down payment?
Yes. Most home buyers use FHSA withdrawals for their down payment and closing costs.
Can I buy with someone who isn’t a first-time buyer?
Yes, but only you can make the FHSA withdrawal. Your co-buyer doesn’t need to be a first-time buyer.
What if I buy but don’t move in within 1 year?
The withdrawal may become non-qualifying. You’d owe tax plus potential penalties.
Can I buy a rental property?
No. The home must be intended as your principal residence. You can’t buy purely as an investment.
Can I buy a cottage?
Yes, if you intend to occupy it as your principal residence within 1 year.
What counts as a qualifying home?
- Single-family homes
- Condos
- Semi-detached houses
- Townhouses
- Duplexes (if you live in one unit)
- Mobile homes
- Shares in co-operative housing
Strategies for Maximum Benefit
Start Early
Open your FHSA as soon as possible to start the 15-year clock and accumulate room.
Max Contributions
Contribute the full $8,000/year to maximize tax deductions and growth.
Invest Aggressively (if time permits)
If you won’t buy for 5+ years, invest in growth assets. If buying soon, prioritize capital preservation.
Combine with HBP
Use both FHSA ($40,000) and HBP ($60,000) for up to $100,000 per person.