First home savings account: A Gen Z guide to achieving home ownership


While Gen Z face many hurdles at the moment, including rising interest rates and inflation, there are still ways to achieve home ownership. In our current economic climate, where many young people feel they will be lifelong renters, the introduction of the new tax-free first home savings account (FHSA) will provide some much-needed assistance.

How does the FHSA work?

The FHSA is a new kind of registered account, like the tax-free savings account (TFSA) and registered retirement savings plan (RRSP). You can contribute up to $8,000 annually toward your FHSA, up to a lifetime limit of $40,000. Contribution room begins to accumulate after you open the account, and you can carry forward any unused portion from one year to the following year, for a maximum contribution of $16,000 in a given year. Another benefit is that contributions to an FHSA are tax-deductible (like an RRSP) and withdrawals are tax-free (like a TFSA). 

Am I eligible for the FHSA?

To qualify for the FHSA, you need to be a Canadian resident who is at least 18 years old. Upon opening the account, you must also qualify as a first-time home buyer and not have lived in a home that you or your spouse or common-law partner owned in the last four calendar years. 

What rules do I need to follow?

Here are some things you’ll need to keep in mind when you open an FHSA:

  • After withdrawing money from the account, you must purchase a home by Oct. 1 of the following calendar year, or the funds will be taxed as income.
  • The home that you purchase must be located in Canada.
  • You are required to close the account after 15 years or at the end of the year you turn 71—whichever comes first.
  • If you don’t use the money to buy a home, you can transfer it to your RRSP.
  • Unlike with the Home Buyers’ Plan (HBP), you don’t need to repay money withdrawn from an FHSA.

Create an FHSA savings plan

Once you’re ready to open an account, you’ll want to have a savings plan. The average home price in Canada was $662,437 in February 2023, according to the Canadian Real Estate Association (CREA), and in the areas of Greater Toronto and Greater Vancouver, the average price was a whopping $1,091,300 and $1,123,400, respectively. The area you want to live in and the type of property you want to buy (such as a townhouse or a condo) will determine your price range. 

From there, you will need to determine the size of your down payment. Homes valued at $1 million or more require a minimum down payment of at least 20%, and homes worth less than that require a down payment of 5% to 10%.

Here’s an example of how you would determine your own savings goal:

Location of future home Ottawa, Ont.
Desired property type Townhome
Target home price $600,000
Down payment goal (%) 20%
Down payment amount ($) $120,000
Number of years to save 12 years
Annual savings required $10,000
Monthly savings required
(annual / 12 months)
Weekly savings required
(annual / 52 weeks)

Since you can contribute a maximum of $40,000 to an FHSA, you’ll have to spread out the remaining $80,000 across other accounts, such as an RRSP (for use with the HBP) and a TFSA. For the HBP, you can pull a maximum of $35,000 from your RRSP (or a maximum of $70,000 for a couple buying a home together). So the balance of $45,000 will have to come from your TFSA. Let’s break this down further to determine how much money you’ll need to save in each account: 

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