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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How to Finance Renovations When Buying a Home in Canada

By Trish Pritchard • October 14, 2026
Can’t Find the Right Home After You’re Pre-Approved? There’s Another Option The best place to start any home purchase is with a mortgage pre-approval. It gives you clarity around your budget and lets you shop with confidence. But what happens when you’ve been pre-approved, you know where you want to live—and nothing suitable fits your price range? This is a common challenge, especially for first-time homebuyers. Before buyer fatigue sets in, it may be worth considering a different approach: buying a home that needs work and financing the renovations as part of your mortgage . What Is a Purchase Plus Improvements Mortgage? A purchase plus improvements program allows you to buy a property and include the cost of approved renovations directly in your mortgage. This can be a great solution if: You can’t find a move-in-ready home within budget You’re open to renovations You want to customize the home from the start It opens up more options and can help you get into a location or property that would otherwise be out of reach. How the Process Works While the idea is straightforward, the process itself is structured and requires planning. Here’s a high-level overview: Renovation quotes are required upfront You’ll need detailed quotes for the work you want completed before final mortgage approval. Renovations must add value The lender must be satisfied that the improvements will increase the property’s value accordingly. Funds are reimbursed, not advanced You pay for the renovations initially. Once the work is completed and verified by an appraiser, the lender reimburses you and adds the cost to your mortgage. With the right guidance, this process is very manageable—but it’s important to understand the steps before committing. Is This Program Right for You? Purchase plus improvements isn’t for everyone. Buying a home is already a big undertaking, and adding renovations can increase stress—especially if timelines, budgets, or contractors become challenging. That said, if you’re financially prepared and like the idea of shaping the home to fit your needs, this program can be an excellent way to get more value and flexibility from your purchase. Final Thoughts If you’re struggling to find the right home after being pre-approved, you may not need to lower your expectations—you may just need a different strategy. If you’d like to explore whether a purchase plus improvements mortgage makes sense for you, feel free to connect. I’d be happy to walk you through the process and outline exactly what this option would look like in your situation.

Fell Behind on a Payment? Don’t Panic—Here’s What to Do

By Trish Pritchard • October 7, 2026
Missed a Credit Card or Line of Credit Payment? Here’s What to Do If you’ve missed a payment on a credit card or line of credit and you’re worried about how it might affect your credit—or your future mortgage—this is for you. First things first: 👉 If you currently have an overdue balance, log in and make the minimum payment now. Seriously. Do that first. Everything else can wait. If You’re Only a Few Days Late Here’s the good news: Credit bureaus don’t record late payments until they reach 30 days past due. So if you missed a due date by a few days and paid it as soon as you noticed, it typically won’t show up on your credit report as a late payment—as long as you’re under the 30-day mark. That said, it never hurts to double-check. You can call your credit card company, explain what happened, and confirm the account is back in good standing. If you normally pay on time, they may even reverse the interest charged. It doesn’t hurt to ask. If You’re 30, 60, or 90 Days Behind If payments have gone past 30 days, your credit has likely been impacted—but the situation is still fixable. The most important step is to: Bring all accounts current as soon as possible Make at least the minimum payment on every account The faster you catch up, the more you limit the damage. Ignoring missed payments only makes things worse. If Cash Flow Is Tight If you’re struggling to make payments, communication matters. Contact your lender and keep them informed—even if you can’t pay right away. Lenders are far more willing to work with you when you’re transparent. What hurts your credit most is silence . If lenders don’t hear from you after repeated missed payments, they may write the balance off as bad debt and send it to collections. Collections can significantly impact your credit and stay on your report for years. How This Affects Mortgage Qualification Repeated missed payments can make qualifying for a mortgage more difficult—but timing matters. Once you’re back to making regular, on-time payments: Your credit can improve over time The impact of past mistakes becomes less significant If you’re planning to buy a home in the next couple of years, addressing credit issues early gives you far more options later. Final Thoughts Missing a payment doesn’t mean you’re “bad with money,” and it doesn’t mean homeownership is off the table. What matters most is how quickly you respond and how consistent you are going forward . If you’d like help reviewing your credit report or understanding where you stand from a mortgage perspective, feel free to connect. I’d be happy to walk through it with you and help you create a clear path forward.

What You Need to Know About Porting a Mortgage When Moving

By Trish Pritchard • September 30, 2026
Porting Your Mortgage: What You Need to Know Before You Rely on It Porting a mortgage means transferring your existing interest rate, remaining term, and outstanding balance from your current home to a new one when you sell and buy again. While some lenders—especially big banks—make porting sound simple, the reality is that porting a mortgage is often complex and far from guaranteed . It’s not a magic solution, and it doesn’t mean you automatically get to keep your old mortgage on your new home. In many ways, porting a mortgage feels like applying for a brand-new one—often with more conditions . Here’s why. 1. You Still Have to Re-Qualify Even though you already have the mortgage, the lender will reassess you. If you: Changed jobs Moved to a new city Are on probation Switched industries or income types …the lender may decline the port. Your previous approval does not carry over automatically. 2. The New Property Must Be Approved The lender also reassesses the new property . Just because they accepted your previous home as collateral doesn’t mean they’ll approve the next one. Expect: A new appraisal A review of the property’s condition Scrutiny around marketability and value If the lender isn’t comfortable with the property, the port can fail. 3. Property Values Rarely Line Up Perfectly Most moves involve a price difference. Buying a more expensive home: You’ll likely need additional funds at a blended rate, which can increase your payment. Buying a less expensive home: You may face a penalty for reducing the mortgage balance. Either scenario can affect your costs. 4. You Still Need a Down Payment Porting doesn’t mean you “swap houses” without cash. You still need: A down payment on the new purchase Closing costs Funds available at the right time This often surprises buyers. 5. Penalties Usually Still Apply (At First) Most lenders: Charge the full mortgage penalty when you sell Refund it only after the port is successfully completed If you’re relying on sale proceeds for your down payment, this temporary penalty can create a cash-flow issue. 6. Timelines Rarely Line Up Perfectly Real estate markets don’t cooperate. You might: Sell quickly but struggle to buy Find a home quickly but wait months to sell Closing dates rarely align, which complicates porting even further. 7. Port Periods Vary by Lender This is where the fine print matters. Depending on the lender, the port window may be: Same day only 30 days 90 days Up to 6 months If the port window is short, both transactions must close within that timeframe—or the port fails. Longer port periods offer flexibility, but also carry the risk of selling first and not finding a replacement property in time. The Bottom Line Porting your mortgage can make sense—especially if you have a strong rate and are buying a similar-priced home. But it is not guaranteed , and it comes with conditions, risks, and timing challenges. Portability is a feature, not a promise. Before you rely on it, it’s important to review all your options , including whether staying with your lender actually makes financial sense. If you’re planning to sell and buy, I’d be happy to walk you through the process, explain your options clearly, and help you decide whether porting is the right move—or if another strategy makes more sense.