What is a First-Time Homebuyer Savings Account (FHSA)?

If you’re hoping to buy your first home soon, one major step is saving for a down payment and closing costs. As a first-time home buyer, you may be eligible for a first-time home buyer savings account (FHSA), a special tax-advantaged account, that can help you save faster.

In this Redfin article, we’ll cover what a first-time home buyer savings account is and which states offer this program. Whether you’re buying a home in Cincinnati, OH, or a townhouse in Portland, OR, here’s what you need to know about FHSAs.

Key takeaways

• First-time homebuyer savings accounts (FHSAs) are tax-advantaged savings accounts.
• They typically offer competitive rates to help future homeowners save for a down payment and closing costs.
• Not all states offer FHSAs, but some have pending legislation to establish programs.

What is a first-time homebuyer savings account (FHSA)?

A first-time homebuyer savings account (FHSA) is a state-sponsored, tax-advantaged savings account that helps you save money for your first home. Offered in some states, the money you contribute or the interest you earn, may qualify for state tax exemptions or deductions. 

As a result, these accounts may help you grow your savings faster. You can use these funds for a variety of home buying expenses including your down payment, closing costs, real estate agent commissions, or inspection and appraisal fees, depending on your state’s guidelines. 

Qualifications for a first-time homebuyer savings account 

It varies by state who is considered a first-time homebuyer, but for the most part, you need to meet the following qualifications to open an FHSA:

• Have never owned a home, or have not owned a home in a certain number of years
• Live and buy a home in the state where you opened the account
• Use the funds for costs such as a down payment, real estate agent fees, or closing costs

What states offer FHSAs?

Not all states offer first-time home buyer savings accounts. Here are the states that currently (or will) offer FHSAs:

• Alabama
• Colorado
• Connecticut (beginning in 2027)
• Idaho
• Iowa
• Kansas
• Maryland
• Michigan
• Minnesota
• Mississippi
• Missouri
• Montana
• Ohio
• Oklahoma
• Oregon
• Virginia

As of 2025, there are three states with pending legislation around FHSAs:

• Illinois
• Massachusetts
• Pennsylvania

State programs are subject to change. Check your state’s housing or revenue department website for the most up-to-date FHSA information.

Where can you open an FHSA?

In states that offer FHSAs, you can typically open an account at participating banks or credit union branches. You’ll need identification, filled-out paperwork, and in some states, a minimum deposit. Some banks may let you open an account online. Check with your local bank or credit union to find out specifics.

What contributions do you need to make?

Minimum contributions vary from program to program. For example, in Missouri. you can contribute the following amounts:

• $1,600 per year, as a single person
• $3,200 per year, as a couple
• $25,000 total over the lifetime of the account

Contribution limits and eligible expenses differ by state. Some programs also cap how long you can contribute or how much interest is tax-exempt.

Do you need a first-time homebuyer savings account? 

If your state offers a FHSA, it can be a helpful way to ensure you’re setting aside enough money to buy a home, especially if you qualify for state tax deductions. While not required, it can give first-time buyers a financial advantage in a competitive housing market.

FAQs about first-time homebuyer savings accounts

What does a first-time homebuyer savings account cover?

Most programs allow you to use the account funds to cover a down payment, closing costs, and real estate agent fees. Some specific costs include appraisal and inspection fees, loan origination costs, and title insurance, among others. 

Can family members contribute to an FHSA?

Yes, most programs allow family members to contribute to your first-time homebuyer savings account. 

Can I use the account to buy a home in another state?

No, most programs don’t allow you to use the funds to buy a home in another state. Check with your state’s program for specifics. 

What happens if I don’t use the funds in the account?

It depends on your state’s program, but you may face certain penalties. For example, in Oregon, you must use the funds within 10 years of opening the account. If you withdraw the funds for purposes other than buying a home, you could face a 5% penalty.

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