First Home Savings Account (FHSA)

The First Home Savings Account (FHSA) is a registered plan introduced by the Canadian government to assist first-time homebuyers in saving for a down payment. It combines features of both the Registered Retirement Savings Plan (RRSP) and the Tax-Free Savings Account (TFSA).

Key Features:

Eligibility: Canadian residents aged 18 to 71 who are first-time homebuyers.
Contribution Limits: Up to $8,000 annually, with a lifetime maximum of $40,000. Unused contribution room can be carried forward to the following year, up to a maximum of $8,000.

Example: How the FHSA Can Work for You

Meet Sarah, a 28-year-old first-time homebuyer. She’s been saving for a down payment but is concerned about how long it will take to reach her goal. Sarah opens a First Home Savings Account (FHSA) to take advantage of the tax benefits and structured savings.

Sarah's Plan:

Annual Contributions: Sarah contributes $8,000 to her FHSA each year.
Tax Savings: Her contributions reduce her taxable income, giving her an annual tax refund of approximately $2,000 (assuming a 25% tax bracket).
Investment Growth: Sarah invests her FHSA funds in low-risk mutual funds, earning an average annual return of 5%.

After 5 Years:

Contributions: $40,000 (maximum lifetime contribution).
Investment Growth: Approximately $5,500 (based on a 5% annual return).
Total Savings: $45,500 tax-free for her first home.

Benefits to Sarah:

She saved $45,500 towards her down payment, which is tax-free when withdrawn for her home purchase.
She received approximately $10,000 in tax refunds over the 5 years, which she could reinvest or use for other expenses.
Sarah didn’t need to repay the withdrawn funds, unlike the Home Buyers’ Plan (HBP - RSP).

What If She Changes Her Mind?

If Sarah decides not to buy a home, she can transfer her FHSA funds to an RRSP without affecting her contribution room. This keeps her savings growing tax-deferred until retirement.

Why This Matters:

The FHSA offers first-time homebuyers like Sarah a structured, tax-efficient way to save for a down payment. It’s a great option for clients looking to maximize their savings and take advantage of government incentives.

Tax Advantages: Contributions are tax-deductible, and withdrawals for purchasing a first home are tax-free, including any investment growth.
Account Duration: The FHSA can remain open for up to 15 years or until the end of the year you turn 71.

Pros:

Tax Benefits: Contributions reduce taxable income, and withdrawals for a qualifying home purchase are tax-free, providing dual tax advantages.
No Repayment Requirement: Unlike the Home Buyers’ Plan (HBP), funds withdrawn from an FHSA for a home purchase do not need to be repaid.
Flexible Investment Options: Funds can be invested in various vehicles, potentially increasing savings through investment growth.

Cons:

Restricted Use: Funds must be used for purchasing a qualifying first home. Withdrawals for other purposes are taxable.
Single-Use Account: The FHSA can only be used once. After purchasing a home and closing the account, you cannot open another FHSA.
Limited Lifespan: The account has a 15-year limit. If you don’t purchase a home within this period, the account must be closed, and funds transferred to an RRSP or RRIF, or withdrawn (with withdrawals being taxable).
Contribution Limits: The lifetime maximum of $40,000 may not be sufficient for a full down payment in higher-priced real estate markets.

Considerations:

Combining with Other Programs: The FHSA can be used alongside the HBP, allowing access to more funds for a home purchase.
Investment Risks: As with any investment account, the value can fluctuate based on market conditions.

The FHSA offers significant tax advantages and a structured savings plan for first-time homebuyers. However, it’s essential to consider the restrictions and ensure it aligns with your homeownership goals and timeline.

Chat with Jacquie

Phone: 613-882-3201

jacquie@jacquiebushell.ca

Online Booking Calendar

Don't Miss Your Mortgage Renewal

Fill out my web form and I will personally email you to remind you of your mortgage renewal.

Sign-Up

Mortgage News:

Property Tax Information Sheet

Property taxes are a MAJOR monthly expense for all homeowners. The collection and portion of monthly property taxes is out of our control but we have outlined below several payment options for your review: OPTION #1 – The Pre-authorized Debit Plans (PAD) Pre Authorized debit plan with City of Ottawa – The Pre-authorized Debit Plans…

Chapter 1:

Have you ever felt like you’re spinning plates, trying to keep everything balanced but fearing one might drop? That’s how Sally felt—until she found a way to take control of her finances and her future.

The Magic of Kindness: A Christmas Story from London Drugs

As we kick off a new year, I wanted to share a deeply personal story that reminded me how life’s smallest moments can lead to the most profound connections.

Claude-Andre Bertrand

a month ago

You need a mortgage? You need an unbiased expert advice? You've found the right person in Jacquie Bushell !!!I recently had the pleasure of chatting with Jacquie Bushell for my mortgage needs, and I cannot express enough how impressed I am with her professionalism, knowledge and desire to help. She took the time to listen to my personal situation, my financial situation and my goals in order to tailor a perfect mortgage plan.Throughout the process, Jacquie's professionalism and responsiveness stood out. She was thorough in explaining all the details, patiently answering my questions (and I had many!), ensuring I felt confident in every decision made. She made sure I understood my options and that I was fully aware of what to expect. Jacquie promptly answers your calls and emails.I highly recommend Jacquie for anyone seeking a mortgage broker who will advocate for their clients and deliver outstanding results.Thank you Jacquie!

Tyler Furness

Jacquie has always had my best interests in mind, and is always receptive to last minute calls or questions. She goes out of her way to ensure I am informed, and prepared for what to expect with mortgages. She provides regular updates, and is very professional. I would not hesitate to recommend her to anyone.

Ryan Kennedy

Jacquie is wonderful to work with, she's professional, friendly and efficient and never rushes the conversation.All the positive things mentioned in all the reviews are absolutely true.

Catherine Semple

Jacquie put me right at ease when arranging my mortgage renewal. With these challenging times it was refreshing to speak with someone extremely knowledgeable and empathetic. The entire process was very quick and easy. I wish I had met her years ago! I would highly recommend her.

susan kent

Jacquie is the BEST person to work with you to solve your Mortgage needs. I have dealt with her for over 25 years, and everyone in my family has their mortgages booked through her, along with many friends. She is the only Mortgage Agent that I ever refer to anyone. Look no further! You have found the person that you need to help you and meet your needs.

GT Traps

3 months ago

Jacquie is a true professional. I have worked with her on multiple property mortgage renewals. Her knowledge, experience and dedication is top notch. She takes the time to explain all scenarios and answers all questions. White glove service at its finest. She loves what she does and truly cares about her clients. Plus, she is very friendly and has a great sense of humour. I wouldn't trust anyone else with these difficult decisions especially in this economy. Highly recommend.

Rosemary

We have had the absolute pleasure of working with Jacquie for many years, spanning two generations of our family. Her expertise, dedication, and genuine care have made every step of the mortgage process seamless and stress-free.What truly sets Jacquie apart is her accessibility – she’s always just a phone call away, ready to answer questions, provide guidance, or offer reassurance whenever we need it.Her personalized service and unwavering commitment to her clients have made her an invaluable part of our family’s journey. We couldn’t recommend Jacquie more highly to anyone looking for a reliable, knowledgeable, and compassionate mortgage broker. If you have a dream, she will help make it come true!

Blair Butler

4 months ago

Working with Jacquie was an absolute pleasure! From the very start, Jacquie was incredibly attentive and took the time to understand our needs. She worked tirelessly to find us the best rate available, and we couldn't be happier with the outcome. What really stood out was her professionalism combined with a genuinely friendly approach that made the entire process feel smooth and stress-free. Jacquie was always available to answer our questions and provided clear, timely updates every step of the way. Her expertise and dedication made a significant difference, and I highly recommend her to anyone in need of a knowledgeable and personable mortgage broker!

Chris Hobbs

We have been dealing with Jacquie for 14 years now. She is hands down the best. Even if she’s not actively searching for a mortgage for you she will give you the best advice possible on renewals, refinancing or money in general. She has saved me money at every turn and helped me make sound financial decisions almost my entire adult life. Thanks Jacquie!!!

Natasha Schreurs

Jacquie is wonderful and our family highly recommend her to aid in your mortgage success. She is organized, highly professional, well informed and educated. She is kind and compassionate and offers amazing service. We have had the pleasure of working with Jacquie on three home purchases and sells and the service was above and beyond. She is open and willing to work with you and give you all the best options. If we buy again, she will be the one we call!