Are you unsure about buying a house? Why you should open an FHSA now

Here’s what you need to know about using this account, including the FHSA contribution limit and deadline, how to open an FHSA account online, and why it might even make sense to open one if you’re on the fence about homeownership and debate your decision.

What is a First Home Savings Account (FHSA)?

The FHSA is a tax-free registered savings account that was introduced in April 2023. The FHSA is designed to help first-time buyers save for a down payment and get into the housing market faster. Account holders can contribute up to $8,000 per year. , up to a lifetime FHSA limit of $40,000 (or twice that amount if you’re part of a couple and are both first-time homebuyers). Depending on where you open your FHSA, you can grow your money faster. For example, EQ Bank’s FHSA savings account offers 2.75% interest and a limited-time bonus offer (more on that below).

Other registered accounts offer tax-free deposits or withdrawals (not both), but the FHSA is completely tax-free as long as the money is ultimately used to purchase your first home. This allows tax protection on both contributions and withdrawals, including any income from interest, dividends or capital gains. An FHSA can hold a wide range of eligible investments, including guaranteed investment certificates (GICs), exchange traded funds (ETFs) and more.

What is the FHSA contribution limit?

An important detail to know about the FHSA is that contribution room is only created once you open an account. That is different from, for example, a tax-free savings account (TFSA)whose contribution room is based on the age of the account holder. Knowing this, it’s wise to open an FHSA as early as possible to get the most out of it, even if you can’t contribute much (or anything) right away.

For example, if you open an FHSA before December 31, 2024, you will get $8,000 of contribution room for 2024 on the date you open the account, plus $8,000 of additional room for 2025 on January 1, for a total of $16,000 in contribution room. .

Additionally, certain FHSAs offer interest on your savings. EQ Bank’s FHSA Savings Account pays 2.75% interest, plus for a limited time you can earn a 1% match on new deposits and transfers made between November 1, 2024 and February 28, 2025. You can open an EQ Bank FHSA online in minutes. (The EQ Bank FHSA is not available in Quebec.) There is also no minimum deposit if you open an FHSA with EQ Bank. You also have the option to purchase EQ Bank’s FHSA GICs (the minimum term is three months).

EQ Bank FHSA Savings Account

go to the site

Interest: 2.75%, plus a temporary 1% discount on new deposits and transfers between November 1, 2024 and February 28, 2025. Read full details about the EQ Bank website.
Minimum balance: n/a
Eligible for CDIC coverage: Yes

go to the site

Why opening an FHSA makes sense even if you’re unsure about homeownership

The FHSA is a nice addition to a few other home buying tools for first-time buyers. You also have access to the Home buyer plan (HBP), which allows individual investors to borrow up to $60,000 from them registered retirement savings plan (RRSP)make a down payment on a home without penalty or tax payment. (Until recently, the amount you could borrow was $35,000 per person; the limit was increased in 2024.)

That’s not all. The upcoming regulatory changes are intended to make mortgages more accessible. As of December 15, 2024, the price ceiling will apply to homes that qualify for an insured mortgage from $1 million to $1.5 million. In addition, first-time homebuyers can get a 30-year mortgage repayment on any type of home (not just new construction). This will result in lower monthly costs, which directly improves the affordability of a given property.