Canada’s beloved First Home Savings Account has lost the plot. Maybe it’s time to rethink it

New research from the Canadian Tax Observatory, shows that the FHSA benefits disproportionately those who least need the support in the housing market: high-income and wealthy households.

There’s a cost, of course. It comes in the form of foregone revenue to the federal purse — money that could go toward any number of programs.

It also comes in the form of exacerbating some of the more disturbing trends in our economy: intergenerational inequities and the gap between rich and poor.

And in the end, by driving more demand for houses, such measures actually undermine their stated purpose, making housing less affordable over time.

That’s not what the FHSA was intended to do, not by a long shot.

The idea was first pitched by the Liberals in the 2021 election campaign. The aim, as stated, was to help Canadians under the age of 40 save for their first home.

The government launched the program in April 2023. By then, the age restriction was gone, and so was any stipulation that a buyer had to be a first timer. It was opened up to homebuyers of any age who had not owned a home for four years previously.

The stated goal, however, was still helping young, first-time homebuyers break into the market and support “generational fairness,” budget documents stated.

Fast forward to now, and we have some initial data about who is using the accounts. A million people signed up right away. The Department of Finance predicts that the FHSA’s popularity has persisted, budgeting for rising amounts of foregone revenue over time.

Indeed, Finance expects the size of the program will have tripled from 2023 to 2027, costing an expected $1.59 billion in 2027. Provinces that mirror the federal program are also foregoing hundreds of millions a year.

So, who is benefiting?

Unsurprisingly, people with more money to spare put bigger contributions into the accounts, maxing out the $8,000 a year on a regular basis. In the FHSA’s first year, individuals making more than $80,000 made up about 40 per cent of the pool of contributors.

To be sure, focusing on those making $80,000 and above doesn’t tell us much about the very rich. But considering that the median income for individuals was $45,400 that year, there’s no doubt that the more affluent among us are first in line to make solid use of the FHSA as a savings vehicle and as a tax shelter.

When it comes to confronting generational inequities, the data is troubling.

The majority of FHSA contributors are younger than 35, and that was indeed supposed to be the target market for the FHSA. Still, almost a quarter of the contributors were over 35, and there are thousands of them who were 55-64 years old.

And there is a whole separate category of people who don’t show up in the charts and graphs about contributors: parents, especially well-off parents.

In a January 2025 survey from the Canada Mortgage and Housing Corp., researchers found that 41 per cent of first-time buyers received gifts to help finance their down payments. The average size of the down payment was $74,570. More than 20 per cent of those first-time buyers said they would not have been able to purchase their home without that help.

Parental support among well-off families means those buyers are getting younger even as housing prices have gone up, Bank of Canada research shows.

In other words, there is a massive generational transfer of wealth and home ownership happening across Canada, enhanced by the FHSA — which allows more affluent parents to shelter that money, transfer it to their children and perpetuate the cycle of privilege, compounding inequality.

And, it’s costing us about $2 billion a year in foregone tax revenue.

The FHSA is just one of a wide array of demand-side incentives offered by governments in the name of alleviating affordability problems. In a supply-constrained real-estate market, encouraging demand can drive up prices or slow down their market-drive decline, undermining the very goals of affordability.

Canadians need to ask themselves a tough question: is the FHSA, with its popularity, extremely generous tax treatment and lenient qualifying requirements, worth the cost to the treasury, to wealth inequality, to generational fairness, to house prices and to affordability over the long run?

If not, it’s time to reconsider.