First Home Savings Account (FHSA) 2025 Update: What First-Time Home Buyers Need to Know

If you’re planning to buy your first home in Ontario this year, there’s a powerful financial tool you should be using — the First Home Savings Account (FHSA). Since its introduction in 2023, this registered account has been helping first-time home buyers across Canada save faster and more efficiently. It does this by combining tax-free growth with tax-deductible contributions.

In this post, I’ll walk you through what’s new with the FHSA in 2025, explain how it compares to other savings tools, and show you how it can help you buy a home in Ontario sooner.

✅ What Is the First Home Savings Account (FHSA)?

To begin with, the First Home Savings Account is a registered savings account created specifically to help Canadians save for their first home.

Here’s how it works:

• You can contribute up to $8,000 per year, with any unused room carried forward.

• There is a lifetime contribution limit of $40,000.

• Your contributions are tax-deductible, just like an RRSP.

• Withdrawals are tax-free when used for a qualifying home purchase, similar to a TFSA.

• Additionally, your funds can be invested in stocks, ETFs, mutual funds, or GICs.

Because of these features, the FHSA is one of the best tax-sheltered accounts available for first-time buyers.

🔄 2025 FHSA Updates and What’s New

Let’s take a closer look at how the FHSA has evolved in 2025.

1. More Financial Institutions Are On Board

Initially, the FHSA was only offered by a few large banks. However, in 2025, many more credit unions, digital banks, and online brokers now offer the FHSA. As a result, you have more choices when it comes to account features, interest rates, and investment options.

Pro Tip: Before opening an account, be sure to compare fees and tools offered by each provider.

2. More Canadians Are Using the FHSA

Thanks to increased awareness and rising home prices, more Canadians are turning to the FHSA to get ahead. In fact, recent stats show that FHSA account openings have more than doubled compared to this time last year.

This surge in popularity shows that first-time buyers are taking advantage of every available resource to reach their goals.

3. It Pairs Well with the RRSP Home Buyers’ Plan (HBP)

Importantly, the FHSA doesn’t replace the RRSP Home Buyers’ Plan — it works alongside it. This means you can use funds from both accounts when purchasing your first home.

For example:

• Withdraw up to $40,000 from your FHSA

• Withdraw up to $35,000 from your RRSP under the HBP

Together, this gives you up to $75,000 in tax-advantaged savings — a huge boost toward your down payment.

4. Better Integration with Mortgage Pre-Approvals

Another exciting update is that some mortgage lenders are now asking buyers whether they have an FHSA. If you do, it can actually improve your standing during the pre-approval process. After all, it shows that you’re serious about buying and have been financially preparing.

🏡 Why the FHSA Matters in Ontario’s Real Estate Market

Now more than ever, Ontario home buyers need a competitive edge. Home prices in areas like Brampton, Mississauga, and the broader GTA continue to climb. Therefore, the FHSA is more valuable than ever.

Not only does it allow you to save faster, but it also puts more money in your pocket through tax benefits — savings you can then apply to your closing costs, moving expenses, or home improvements.

📋 FHSA Eligibility Requirements

To open an FHSA in 2025, you must meet the following criteria:

• Be a resident of Canada

• Be 18 years of age or older

• Be a first-time home buyer, meaning you haven’t lived in a home you owned in the last four calendar years

If you meet these qualifications, you can start contributing right away.

💸 What If You Don’t End Up Buying a Home?

Fortunately, the FHSA is flexible. If you decide not to buy a home, you can transfer the funds to your RRSP or RRIF — without paying taxes and without affecting your contribution room.

So even if your plans change, your savings remain protected and continue growing tax-free.

🧠 FHSA vs. RRSP vs. TFSA: What’s the Difference?

In summary:

• The FHSA is ideal for first-time home buyers.

• The RRSP is best for long-term retirement savings (and also supports the HBP).

• The TFSA is great for flexible, all-purpose savings with tax-free growth.

That said, the FHSA is the only one designed specifically for homeownership — making it a clear winner if that’s your goal.

📞 Ready to Start Saving Toward Your First Home?

Whether you’re just starting your journey or you’re ready to make a move this year, I can help. From setting up an FHSA strategy to securing financing and finding the right property in Brampton, Mississauga, anywhere in the GTA, Dufferin, Halton or Waterloo region? I’ve got you covered.

Let’s turn your dream of homeownership into a reality.

Mellinda Thaxter

📞 647-289-9765
📍 Century 21 Leading Edge Realty, Mississauga, ON
🌐 mellinda-thaxter.c21.ca
📧 mellinda.thaxter@century21.ca
🏡 Helping You Buy, Sell & Invest in Ontario Real Estate