First Home Savings Account or FHSA - What Is It And How Does It Work?

What is a First Home Savings Account?

The First Home Savings Account is a registered plan that was introduced by the federal government in 2022 and it is designed to help first time home buyers save funds towards a down payment for a new home TAX-FREE.  This program can be used in conjunction with RRSP savings, which allows up to $35K to be used under the current Home Buyers' Plan.  Unlike an RRSP, the FHSA withdrawals do not need to be paid back over a 15 year period.  

Who Is Eligible To Open A FHSA

To be eligible to use this program you must be at least 18 years old (or no less than the age of majority in your province, so 19 years old in B.C.), be a Canadian resident with a Social Insurance Number and be purchasing your first home.  If you have owned a home in the past, you may still be eligible to use this program provided you have not owned a home where you have lived in the last 4 years. 

How Does A FHSA Work?

You can then set up an account with your regular bank and make annual contributions up to $8000 with a lifetime limit of $40,000.  Should you contribute less than $8000 annually, your contribution room is carried forward to the following year.  The account can remain open for a maximum of 15 years or until the end of the year when the account holder turns 71. The funds you save are tax-free! 

If you are looking for more information on this program, click here...