Plan on getting into the housing market? Consider an FHSA

First home savings account

Whether it is your first or subsequent venture into the housing market, it will likely look a bit different than it did even a few years ago.

Rising interest rates and changing qualification rules mean you may have to wait a bit longer, or rely on help from family.

This week I had a call with a young lady that is looking to buy a home in the Okanagan. She said she has been saving her down payment but feels like it will take a while to save enough. She also said she needed some help trying to figure out a game plan.

What I most appreciated about the call was her realistic approach. She said she felt it would be two to three years before she would be ready to move forward with a purchase and wanted to make sure she was doing everything she could to get ready.

The same day I sat in on a learning session about the First Home Savings Account (FHSA). Starting April 1, Canadians can contribute up to $8,000 per year to a maximum of $40,000 to be used towards the down payment on a home.

The contributions are tax deductible.

Who can open an FHSA? You must be:

How do you open an FHSA?

Contact any FHSA issuer. This can be a bank, credit union, or a trust or insurance company. They will be able to advise you as to what type of savings or investment products your money can be invested in.

The funds in your FHSA can be combined with funds withdrawn from RRSPs under the Home Buyers Plan (HBP) to be used towards your down payment. The total between the two would be $75,000 or $150,000 per couple.

These may seem like pie-in-the-sky numbers, but even leveraging the plans for part of those funds may help significantly with the purchase of your home.

Saving your down payment can be a real challenge, particularly if you are renting. The cost of living is increasing and making it more difficult to tuck money away. When life happens it can be tempting to dip into your down payment savings.

A significant advantage to opening a FHSA or contributing to your RRSP is that it is not so easy to dip into your down payment savings. Perhaps an even more significant advantage is that your contributions are tax deductible which ultimately helps your savings plan.

Check out highlights of the First Home Savings Account here.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.

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About the Author

Tracy Head helps busy families get a head start on home ownership.

With today’s increasingly complicated mortgage rules, Tracy spends time getting to know her clients and helps them to better understand the mortgage process. She supports her clients before, during, and after their mortgage is in place.

Tracy works closely with her clients, offering advice and options. With access to more than 40 different lenders. She is able to assist with residential, commercial, and reverse mortgages in order to match the needs of her clients with the right mortgage package.

Tracy works hard to find the right fit for her clients and provide support for years down the road.

Call Tracy at 250-826-5857 or reach out by email [email protected]

Visit her website at www.headstartmortgages.com

Download her app: Headstart Mortgage Architects



The views expressed are strictly those of the author and not necessarily those of Castanet. Castanet does not warrant the contents.

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