How the First Home Savings Account works in 2026: who qualifies, the $8,000 and $40,000 limits, how the deduction works, the exact conditions for a tax-free withdrawal, and your options if you never buy.
One rule decides it: your tax rate today versus your tax rate when you withdraw. Here is that rule with 2026 numbers for every income level, the two exceptions that override it, and a calculator for your own case.
You get a lifetime $2,000 cushion above your RRSP deduction limit. Beyond it, the CRA charges 1% a month and expects a T1-OVP within 90 days of year-end. Here is how to tell if you are over, what it costs, and the forms that get the money out without withholding tax.
The CRA charges 1% a month on the highest excess in your TFSA. Here is how people end up over the limit, what it costs, the exact steps and deadline to fix it, and how to ask for the penalty to be waived.
Both grow tax-free and both come out tax-free for a home. Only one gives you a deduction on the way in. Here is the math on FHSA first, when the TFSA still wins, and how to move existing TFSA savings across without losing room.