If you’re looking to buy your first home soon, one of the big steps is to save for your down payment and closing costs. If you’re a first-time homebuyer, you may be eligible for a First-Time Homebuyer Savings Account (FHSA), a special tax-advantaged account that can help you save faster.
This Redfin article explains what a first-time homebuyer savings account is and which states offer the program. Whether you’re buying a home in Cincinnati, Ohio or a townhouse in Portland, Oregon, here’s what you need to know about the FHSA.
Important points
The First Home Buyer Savings Account (FHSA) is a tax-advantaged savings account. We typically offer competitive rates to help prospective homeowners save money on their down payment and closing costs. Not all states offer FHSA, but some have pending legislation to establish the program.
What is a First Time Home Buyer Savings Account (FHSA)?
A First-Time Home Buyer Savings Account (FHSA) is a state-sponsored, tax-advantaged savings account that helps you save money for your first home purchase. In some states, the money you donate or the interest you earn may be exempt or deductible from state taxes.
As a result, these accounts can help your savings grow faster. These funds can be used for a variety of home purchase costs, including down payments, closing costs, real estate agent fees, and inspection and appraisal fees, depending on state guidelines.
Eligibility for a savings account for first-time home buyers
Who is considered a first-time homebuyer varies by state, but in most cases, you must meet the following qualifications to open an FHSA:
Have never owned a home or haven’t owned a home for a certain number of years Buy a home while living in the state where you opened the account Use the funds for costs such as a down payment, real estate commissions, and closing costs
Which states offer FHSA?
Not all states offer savings accounts to first-time homebuyers. States that currently offer (or plan to offer) FHSA are:
Alabama Colorado Connecticut (2027 and beyond) Idaho Iowa Kansas Maryland Michigan Minnesota Mississippi Missouri Montana Ohio Oklahoma Oregon Virginia
As of 2025, there are three states with pending FHSA legislation.
State programs are subject to change. Check your state’s housing or revenue department website for the latest FHSA information.
Where can I open an FHSA?
In states that offer the FHSA, you can usually open an account at a participating bank or credit union branch. Proof of identification, completed paperwork and, in some states, a minimum bond are required. Depending on your bank, you may be able to open an account online. Contact your local bank or credit union for more information.
What contribution do I need to make?
Minimum contributions vary by program. For example, Missouri. You can donate the following amounts:
$1,600 per year, $3,200 per year for singles, $25,000 per year for couples, $25,000 total over the life of the account.
Contribution limits and eligible expenses vary by state. Some programs have limits on how long you can contribute and how much interest can be tax-free.
Do first-time homebuyers need a savings account?
If your state offers an FHSA, it can be a helpful way to ensure you have enough money to buy a home, especially if you qualify for state tax credits. Although not required, it can provide a financial advantage to first-time buyers in a competitive housing market.
First-time homebuyer savings account FAQs
What does a first-time homebuyer savings account cover?
Most programs allow you to use account funds to cover down payments, closing costs, and real estate agent fees. Specific costs include appraisal fees, inspection fees, loan origination fees, and title insurance.
Can my family contribute to the FHSA?
Yes, most programs allow your family to contribute to your first-time homebuyer savings account.
Can I use this account to buy a home in another state?
No, most programs do not allow you to use the funds to purchase a home in another state. Check your state’s program for more information.
What happens if I don’t use the funds in my account?
Depending on your state’s program, certain penalties may apply. For example, Oregon requires funds to be used within 10 years of opening the account. If you withdraw funds for purposes other than buying a home, you may be subject to a 5% penalty.
