If buying your first home is part of your 2026 plans, opening a First Home Savings Account (FHSA) before the end of this year could be one of the smartest financial moves you make. Even if you’re not ready to contribute right away, opening your FHSA before December 31 unlocks an important tax advantage that can help you save more — and faster — for your first home.

What Is an FHSA?

The First Home Savings Account is a government-registered savings plan designed to help Canadians save for their first home. Introduced in 2023, the FHSA combines the best features of an RRSP and a TFSA. You can contribute money to the account, invest it for growth, and when it’s time to buy your first home, you can withdraw both your contributions and any investment gains tax-free — as long as it’s for a qualifying home purchase.

Nearly half a million Canadians have already opened an FHSA since its launch, according to Statistics Canada. It’s quickly becoming one of the most effective ways to save for a down payment, especially in Alberta, where home prices remain relatively affordable compared to other major provinces.

You can hold a wide range of investments in an FHSA, including cash, mutual funds, bonds, and Guaranteed Investment Certificates (GICs). Contributions are tax-deductible, which means they can lower your taxable income when you file your taxes, similar to RRSP contributions.

Who Can Open an FHSA?

To open an FHSA, you must:

• Be a Canadian resident

• Be at least 18 years old (or 19 in provinces where that is the age of majority) and under 71

• Be a first-time homebuyer, meaning you haven’t lived in a home you or your spouse or partner owned in the current year or the previous four calendar years

Even if you’ve owned a home in the past, you may still qualify as a first-time buyer if it has been more than four years since you last owned and lived in one.

FHSA Contribution Limits

You can contribute up to $8,000 per year and up to a lifetime total of $40,000. Any unused contribution room can carry forward to the following year.

Here’s how that can benefit you: if you open an FHSA this year (even with no contributions yet), you’ll unlock your 2025 contribution room. Then, when January 2026 arrives, you’ll also gain your next $8,000 of new contribution room — giving you a total of $16,000 you can contribute right away.

That’s a major reason to open your account before December 31. Even if you don’t have cash to deposit this year, simply opening the FHSA ensures you don’t lose this year’s $8,000 room — you’ll have it available to use later.

How Long Can an FHSA Stay Open?

An FHSA can stay open for up to 15 years from the date it’s opened, or until the end of the year you turn 71 — whichever comes first. Once you make a qualifying withdrawal to buy your first home, you’ll need to close the account by the end of the following year.

If you decide not to use your FHSA for a home purchase, you can transfer the balance to your RRSP or RRIF without paying tax. If you withdraw it for other reasons, however, the funds will be considered taxable income.

FHSA vs. TFSA and RRSP

The FHSA shares features with both the TFSA and the RRSP:

This flexibility allows you to use multiple programs together. For instance, you can combine FHSA savings with the RRSP Home Buyers’ Plan and TFSA withdrawals to maximize your down payment and minimize taxes.

When It Might Be Better to Wait

Opening an FHSA starts the 15-year clock, so if you’re many years away from buying your first home, you might want to wait. Also, FHSA contributions are most beneficial when you’re earning a higher income and can take advantage of the tax deduction. However, you can always open your account now and defer claiming the deduction until a future year when it will save you more on taxes.

Partnering With Josh Tagg for Your Home Financing

Understanding the FHSA is just one piece of the homeownership puzzle. When it comes time to get pre-approved, compare rates, and structure your mortgage, having me as your broker makes all the difference.

I help first-time buyers turn savings plans like the FHSA into homeownership success stories. I can guide you through how the FHSA fits into your broader financing strategy and ensure your mortgage plan aligns with your goals.

If you’re thinking about buying your first home in 2026, now is the time to act. Open your FHSA before December 31, and then reach out to me to start planning your next steps toward homeownership.