Here’s what you must learn about using this account, including the FHSA contribution limit and deadline, how one can open an FHSA account online, and why it’d even make sense to open one for those who’re undecided about homeownership are and discuss your decision.
What is a First Home Savings Account (FHSA)?
The FHSA is a tax-free, registered savings account that launched in April 2023. The FHSA is designed to assist first-time buyers save for a down payment and get into the actual estate market faster. The FHSA allows account holders to contribute as much as $8,000 per 12 months, as much as a lifetime FHSA limit of $40,000 (or double that quantity for those who are a part of a pair and are each buying a house for the primary time). Depending on where you open your FHSA, you possibly can grow your money faster. EQ Bank’s FHSA savings account, for instance, offers 2.75% interest in addition to a limited-time bonus offer (more on that below).
Other registered accounts offer tax-free deposits and withdrawals—not each—however the FHSA is totally tax-free so long as the funds are ultimately used to buy your first home. This allows for tax relief on each deposits and withdrawals, including any income from interest, dividends or capital gains. An FHSA can hold a big selection of qualified investments, including guaranteed investment certificates (GICs), exchange-traded funds (ETFs), and more.
What is the FHSA contribution limit?
An necessary detail to know concerning the FHSA is that contribution room will not be created until you open an account. This differs, for instance, from a tax-free savings account (TFSA), whose contribution scope is determined by the age of the account holder. With that in mind, it is sensible to open an FHSA sooner fairly than later to get probably the most out of it, even for those who cannot contribute much (or anything) instantly.
For example, for those who open an FHSA by December 31, 2024, you’ll receive $8,000 in 2024 contribution flexibility on the day you open the account, plus $8,000 more in 2025 contribution flexibility on January 1, for a complete of $16,000 in contribution flexibility .
Additionally, certain FHSAs offer interest in your savings. EQ Bank’s FHSA Savings Account pays 2.75% interest, plus you possibly can earn a 1% match on recent deposits and transfers made between November 1, 2024 and February 28, 2025 for a limited time. You can try this Open an EQ Bank FHSA online in minutes. (The EQ Bank FHSA will not be available in Quebec.) Additionally, there is no such thing as a minimum deposit whenever you open an FHSA with EQ Bank. You even have the choice to buy EQ Bank’s FHSA GICs (minimum term is three months).
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EQ Bank FHSA Savings Account
- Interest rate: 2.75% plus a limited-time 1% discount on recent deposits and transfers between November 1, 2024 and February 28, 2025. Read the complete details EQ Bank website.
- Minimum balance: n/a
- Eligibility for CDIC Coverage: Yes
Why opening an FHSA is sensible even for those who’re still undecided about homeownership
The FHSA is complement to another entry-level home buying tools. You even have access to the Home Buyers’ Plan (HBP), which allows individual investors to borrow as much as $60,000 from their Registered Retirement Savings Plan (RRSP) without penalties or taxes to make a down payment on a house. (Until recently, the loan amount was $35,000 per person – the limit was increased in 2024.)
That’s not all. Upcoming regulatory changes aim to make mortgages more accessible. By December 15, 2024, the worth cap for homes eligible for an insured mortgage will increase from $1 million to $1.5 million. Additionally, first-time home buyers can get a 30-year mortgage repayment on any sort of home (not only recent construction). This leads to lower monthly storage costs, which directly improves the affordability of a given property.
