Tax Free First Home Savings Account

Trish Pritchard • April 4, 2023

Canada’s new tax-free First Home Savings Account kicks in April 1. Here’s what you need to know

The dream of home ownership may be a just little closer this year for Canadians, with the introduction of a new tax-free first home savings account. The new Tax-Free First Home Savings Account (FHSA) rolls out April 1, 2023 with the intention of helping Canadians save towards their first home.

Home affordability in Canada has been a significant challenge for first-time buyers. The high cost of housing in major cities, combined with low inventory levels and increased demand, has led to a surge in home prices. This has made it difficult for first-time buyers to save enough for a down payment, let alone afford a mortgage.

The pandemic has further exacerbated the situation, with many Canadians experiencing job losses or reduced income. As a result, the dream of owning a home has become increasingly out of reach for many young Canadians, and policymakers are grappling with solutions to make housing more affordable.


Enter the Tax-Free First Home Savings Account (FHSA)

Part of the Liberal government’s 2022 federal budget proposal tackled the ever-growing issue of home affordability. They’ve introduced a new way to save up to $40,000 for your first home, tax-free, called the Tax-Free First Home Savings Account (FHSA).

You can open your new Tax-Free First Home Savings Account from April 1, 2023 and it will allow Canadians who are at least 18 to save up to $40,000 for their first home.

If eligible, you can contribute up to $8,000 each year to the account but you have to use these funds within 15 years of first opening an FHSA or before you turn 71 (whichever is earlier), otherwise the account would have to be closed.


What are the benefits of the Tax-Free First Home Savings Account (FHSA)?

This new account is a great way to save for your homebuying goals because you don’t pay a tax bill on gains from these savings. For example, if you save $40,000, invest that amount, and gain $20,000 on your investment, you’ll now have $60,000 to put towards your house purchase as the $20,000 would be essentially tax-free. Similar to a Registered Retirement Savings Plan (RRSP), which gives you tax-deduction perks, and a Tax-Free Savings Account (TFSA), as your investments grow, they are not taxed. This means that the money you put in and earn in this account goes towards the down payment of your first home.


Who is eligible for the Tax-Free First Home Savings Account (FHSA)?

So, who can use the new account? There are three important components to qualify for this investment vehicle.

  • You need to be a resident of Canada
  • You have to be at least 18 years of age (or the age of majority in your province or territory)
  • You or your spouse can’t own a home in which you lived, at any time in the year the account is opened or during the previous four calendar years


Am I eligible for the FHSA if my spouse is a homeowner but I’m not?

You are not eligible for the FHSA if your spouse’s property has been your principal place of residence in the current year or in the last four years.

However, if you separate and don’t live in that residence for at least four years and don’t purchase another property yourself, you’re then eligible to open an FHSA.

However, if you no longer have a spouse who’s an owner and you have not owned your main place of residence yourself for more than 4 years, you’re then eligible to open an FHSA.


How long do I have to buy my first property with the Tax-Free First Home Savings Account?

You’re allowed to hold an FHSA for 15 years or until age 71. This means that you have until December 31 of the year in which you either reach the 15th anniversary of your account opening or turn 70 to use your FHSA to purchase your first property.

Your FHSA must be closed by December 31 of the year following the date of your first qualifying withdrawal.


What do I do with unused money in my FHSA?

Suppose you bought a property, but still have money left over in your FHSA. If you still have money in your FHSA at the time of closing, several options are open to you:

  1. Make a tax-free direct transfer to an RRSP or RRIF without affecting your RRSP contribution room.
  2. Withdraw the money, which is subject to tax withholding, and deposit it into a daily chequing account. You could also reinvest it in a TFSA, for example.


What’s the difference between the FHSA and HBP?

You may already be familiar with the HBP Home Buyers Plan, which is a Canadian government program that allows first-time homebuyers to withdraw up to $35,000 from their registered retirement savings plan (RRSP) to use as a down payment on their first home. HBP is also designed to help Canadians enter the housing market by providing them with tax-free funds to put towards the purchase of their first home. However, there are key difference between the newly-introduced FHSA and the HBP.


FHSA (tax-free first home savings account)

The Tax-Free First Home Savings Account is a new registered account that provides tax-free savings for first-time home buyers.

  • No repayment required
  • No withdrawal limit
  • Maximum annual contributions of $8,000 and a lifetime total of $40,000
  • No minimum holding period required for contributions to be deductible and eligible for withdrawal
  • The deadline for contributions to a FHSA is December 31 of each year


HBP (Home Buyer’s Plan)

The Home Buyers’ Plan (HBP) is a program that allows you to withdraw funds from your RRSP to buy or build a first home.

  • Repayment required
  • Withdrawal limit of $35,000
  • Maximum annual contributions of the RRSP, which is 18% of your previous year’s income or the current fixed contribution limit
  • The money must be deposited into your RRSP 90 days before you withdraw it under the HBP
  • Deadline for RRSP contributions: 60 days after the end of the year


Can I combine the FHSA and HBP?

Yes, you can combine the FHSA with the HBP. In addition to making a withdrawal from your FHSA for the purchase or construction of a first home, you can also draw up to $35,000 from your RRSP under the HBP program. Are you a couple? You can each combine your respective FHSA accounts with an HBP withdrawal to maximize your down payment.


This article was originally published on Deeded.ca here.
TRISH PRITCHARD
MORTGAGE BROKER

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Make the Most of Summer: Outdoor Project Ideas for Every Space

By Trish Pritchard • July 10, 2025
Summer in Canada is short—but sweet. With warm weather and long evenings, it’s the perfect time to get outside and enjoy your outdoor space, no matter how big (or small) it is. Whether you have a tiny patio or a sprawling backyard, a few creative upgrades can go a long way toward turning your space into your personal summer oasis. Below are ideas for every type of outdoor space, from cozy balconies to large backyards! For Patio-Only Spaces Limited to a balcony or concrete patio? No problem! Small spaces can still offer big enjoyment. 1. Upgrade the Flooring Add interlocking tiles to give your concrete floor a more polished look—wood grain, grass panels, or composite styles are all popular, easy-to-install options. 2. Create an Outdoor Movie Zone Hang a pull-down screen or grab a portable stand, pair it with a mini projector, and voilà—your very own outdoor movie theatre under the stars! 3. Start an Herb Garden Railing planters are perfect for growing basil, mint, parsley, and more. Fresh herbs at your fingertips—and they smell amazing too! 4. Add Some Twinkle Wrap fairy lights around your railing or overhead beams to bring cozy vibes and nighttime charm. 5. Grill Like a Pro Maximize your BBQ season with a compact baby-que. Weber’s Q Series is a great option for small spaces without compromising grilling power. For Small Yards A little yard can still pack a lot of personality. Here are ways to make the most of every square foot: 1. Game Time! Add a mini putting green or an axe-throwing target (just be safe!) for quick bursts of backyard fun that don’t take up much space. 2. Warm Up Your Nights Add a heating lamp or portable fire bowl to keep your evenings cozy well into the fall. 3. Grow Your Own Produce Build or buy a raised garden box to grow tomatoes, cucumbers, lettuce, or other easy vegetables. Gardening is relaxing—and delicious! 4. DIY Bird Bath Make a pedestal bird bath using an old vase, a platter, and strong glue. You likely have everything you need already at home—and the local birds will thank you! For Big Yards If space isn’t an issue, the sky’s the limit! Here are some larger-scale projects to take your yard to the next level: 1. Build a Catio Yep, it’s a “cat patio”! Give your feline friends a safe way to enjoy the outdoors with a screened-in enclosure attached to your home. 2. Create a Permanent Fire Pit Use stones and a fire ring to build a beautiful, safe fire pit. You can even add airflow cutouts to reduce smoke—perfect for those marshmallow roasts! 3. Tile a Dining Area Install paving stones or tiles to define an outdoor dining space. Add a table, some string lights, and enjoy al fresco meals all summer long. Need More Inspiration? If none of these projects quite fit your vision, check out Home Depot’s DIY backyard ideas—complete with step-by-step instructions and material lists to help you bring your outdoor dreams to life. Soak It Up While It Lasts No matter the size of your space, there’s always something you can do to enhance your outdoor experience. So get out there, get creative, and make the most of these sunny summer days. See you back here in August—with more tips, tricks, and homeowner insights!

Mortgage Financing Explained

By Trish Pritchard • July 9, 2025
If you’re like most Canadians, chances are you don’t have enough money in the bank to buy a property outright. So, you need a mortgage. When you’re ready, it would be a pleasure to help you assess and secure the best mortgage available. But until then, here’s some information on what to consider when selecting the best mortgage to lower your overall cost of borrowing. When getting a mortgage, the property you own is held as collateral and interest is charged on the money you’ve borrowed. Your mortgage will be paid back over a defined period of time, usually 25 years; this is called amortization. Your amortization is then broken into terms that outline the interest cost varying in length from 6 months to 10 years. From there, each mortgage will have a list of features that outline the terms of the mortgage. When assessing the suitability of a mortgage, your number one goal should be to keep your cost of borrowing as low as possible. And contrary to conventional wisdom, this doesn’t always mean choosing the mortgage with the lowest rate. It means thinking through your financial and life situation and choosing the mortgage that best suits your needs. Choosing a mortgage with a low rate is a part of lowering your borrowing costs, but it’s certainly not the only factor. There are many other factors to consider; here are a few of them: How long do you anticipate living in the property? This will help you decide on an appropriate term. Do you plan on moving for work, or do you need the flexibility to move in the future? This could help you decide if portability is important to you. What does the prepayment penalty look like if you have to break your term? This is probably the biggest factor in lowering your overall cost of borrowing. How is the lender’s interest rate differential calculated, what figures do they use? This is very tough to figure out on your own. Get help. What are the prepayment privileges? If you’d like to pay down your mortgage faster. How is the mortgage registered on the title? This could impact your ability to switch to another lender upon renewal without incurring new legal costs, or it could mean increased flexibility down the line. Should you consider a fixed rate, variable rate, HELOC, or a reverse mortgage? There are many different types of mortgages; each has its own pros and cons. What is the size of your downpayment? Coming up with more money down might lower (or eliminate) mortgage insurance premiums, saving you thousands of dollars. So again, while the interest rate is important, it’s certainly not the only consideration when assessing the suitability of a mortgage. Obviously, the conversation is so much more than just the lowest rate. The best advice is to work with an independent mortgage professional who has your best interest in mind and knows exactly how to keep your cost of borrowing as low as possible. You will often find that mortgages with the rock bottom, lowest rates, can have potential hidden costs built in to the mortgage terms that will cost you a lot of money down the road. Sure, a rate that is 0.10% lower could save you a few dollars a month in payments, but if the mortgage is restrictive, breaking the mortgage halfway through the term could cost you thousands or tens of thousands of dollars. Which obviously negates any interest saved in going with a lower rate. It would be a pleasure to walk you through the fine print of mortgage financing to ensure you can secure the best mortgage with the lowest overall cost of borrowing, given your financial and life situation. Please connect anytime!

What You Need To Know About Co-Signing A Mortgage

By Trish Pritchard • July 2, 2025
So you’re thinking about co-signing on a mortgage? Great, let’s talk about what that looks like. Although it’s nice to be in a position to help someone qualify for a mortgage, it’s not a decision that you should make lightly. Co-signing a mortgage could have a significant impact on your financial future. Here are some things to consider. You’re fully responsible for the mortgage. Regardless if you’re the principal borrower, co-borrower, or co-signor, if your name is on the mortgage, you are 100% responsible for the debt of the mortgage. Although the term co-signor makes it sound like you’re somehow removed from the actual mortgage, you have all the same legal obligations as everyone else on the mortgage. When you co-sign for a mortgage, you guarantee that the mortgage payments will be made, even if you aren’t the one making them. So, if the primary applicant cannot make the payments for whatever reason, you’ll be expected to make them on their behalf. If payments aren’t made, and the mortgage goes into default, the lender will take legal action. This could negatively impact your credit score. So it’s an excellent idea to make sure you trust the primary applicant or have a way to monitor that payments are, in fact, being made so that you don’t end up in a bad financial situation. You’re on the mortgage until they can qualify to remove you. Once the initial mortgage term has been completed, you won’t be automatically removed from the mortgage. The primary applicant will have to make a new application in their own name and qualify for the mortgage on their own merit. If they don’t qualify, you’ll be kept on the mortgage for the next term. So before co-signing, it’s a good idea to discuss how long you can expect your name will be on the mortgage. Having a clear and open conversation with the primary applicant and your independent mortgage professional will help outline expectations. Co-signing a mortgage impacts your debt service ratio. When you co-sign for a mortgage, all of the debt of the co-signed mortgage is counted in your debt service ratios. This means that if you’re looking to qualify for another mortgage in the future, you’ll have to include the payments of the co-signed mortgage in those calculations, even though you aren’t the one making the payments directly. As this could significantly impact the amount you could borrow in the future, before you co-sign a mortgage, you’ll want to assess your financial future and decide if co-signing makes sense. Co-signing a mortgage means helping someone get ahead. While there are certainly things to consider when agreeing to co-sign on a mortgage application, chances are, by being a co-signor, you'll be helping someone you care for get ahead in life. The key to co-signing well is to outline expectations and over-communicate through the mortgage process. If you have any questions about co-signing on a mortgage or about the mortgage application process in general, please connect anytime. It would be a pleasure to work with you.