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A New Path to Your First Home: The FHSA with BMO InvestorLine

The First Home Savings Account (FHSA) is a powerful tool for aspiring homeowners. Discover how BMO InvestorLine gives you the flexibility to manage your FHSA and work towards your down payment goal.

Updated

4 min. read

Your Dream Home Just Got Closer: A Guide to the FHSA

For many Canadians, the dream of owning a first home can feel challenging. Saving for a down payment is a major hurdle, but a powerful new account type is here to help you reach that goal: The First Home Savings Account (FHSA).

Launched in 2023, the FHSA is a registered investment account designed specifically to help you save for your first home. Think of it as a hybrid that combines the features of an RRSP and a TFSA. Like an RRSP, your contributions are tax-deductible, which can help lower your taxable income for the year. And like a TFSA, your investment growth and qualifying withdrawals for a home purchase are completely tax-free.

Here are the key details at a glance:

Contribution Limits: You can contribute up to $8,000 per year, to a lifetime maximum of $40,000.
Carry-Forward Rule: You can carry forward your unused annual contribution room (up to a maximum of $8,000). However, you must open an FHSA account first to begin accumulating this room. For example, to carry forward your unused room from 2024 into 2025, your FHSA must have been opened in 2024.
What if Plans Change? If you decide not to purchase a home, your savings aren't lost. You can transfer the funds tax-free to your RRSP or RRIF.

Supercharge Your Savings: The BMO InvestorLine Advantage

Opening an FHSA is a great first step, but where you open it can make a big difference. While you could hold your contributions in cash, a self-directed FHSA with BMO InvestorLine unlocks the potential to grow your down payment faster by investing it in the market.

This approach comes with several key benefits:

Flexibility and Choice

Your financial goals are unique. With a BMO InvestorLine FHSA, you are in control. You can build a personalized portfolio from a wide range of investment options, including stocks, bonds, Guaranteed Investment Certificates (GICs), and exchange-traded funds (ETFs).

Potential for Higher Returns

Since investment growth within an FHSA is tax-sheltered, your money has the potential to grow more over time compared to a standard savings account. This tax-free compounding is a powerful engine for your down payment savings.

Control and Transparency

Stay in the driver's seat of your investment journey. With BMO InvestorLine, you can monitor your portfolio 24/7, access real-time quotes, and use powerful research tools and educational resources to make informed decisions with confidence.

“The FHSA combines the features of an RRSP and a TFSA, making it one of the most effective ways to save for a first home.”

Putting it into Practice: Hypothetical FHSA Scenarios

Disclaimer: These scenarios are for illustrative purposes only, are not investment advice, and do not reflect the performance of any specific security. Investment values can fluctuate.

The Long-Term Planner: Alex

Alex is 24 and hopes to buy a condo in the next 7-10 years. With a long time horizon, Alex is comfortable with a portfolio focused on growth. He opens a Self-Directed FHSA and contributes regularly. He uses BMO InvestorLine’s research tools to build a diversified portfolio of broad-market ETFs, allowing him to align his investments with his long-term goal.

The Guided Investor: Sarah

Sarah is 40 and aims to buy her first home in the next three years. She feels confident about saving but wants a second opinion on her investment choices. She opts for a BMO InvestorLine adviceDirect account for her FHSA. This gives her the ability to manage her own trades while having access to personalized advice and trade recommendations online and portfolio support from licensed advisors. Sarah discusses her shorter time horizon and cautious approach and receives guidance to help her construct a suitable portfolio of GICs and fixed-income ETFs, giving her the confidence to move forward.

Ready to Start Your Homebuying Journey?

Getting started is simple. To open an FHSA, you need to be a Canadian resident and a first-time homebuyer. The account is available to individuals between the ages of 18 and 71, but you must have reached the age of majority in your province or territory. With BMO InvestorLine, you have two great ways to invest.

Choose Your Investing Style

BMO InvestorLine Self-Directed: Perfect for confident investors who want full control over their investment decisions and access to a robust suite of tools and research.
BMO InvestorLine adviceDirect: Get unbiased recommendations, continuous monitoring of your portfolio and personalized support from licensed advisors, all so you can trade with confidence.

How to Open Your Account

You can complete your application online or in-person at your nearest BMO branch. Once your account is open, you can fund it via online banking or by transferring funds from another financial institution.

Ready to take the first step towards your dream home?

Open your BMO InvestorLine FHSA today.

Ready to start investing?

Start investing online with BMO InvestorLine Self-Directed.

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