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EQ Bank FHSA: Tax-Free Savings For Your First Home

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EQ Bank became the latest bank to offer the First Home Savings Account (FHSA), a tax-free plan you can use to save for your first home.

With the EQ Bank FHSA, you earn competitive interest rates on savings and GICs, and there are no fees.

Other financial institutions offering FHSAs in Canada include Wealthsimple, Questrade, RBC, and Fidelity.

How To Open an EQ Bank FHSA

EQ Bank’s FHSA Savings Account is all digital, meaning you can fully open the account online from home.

Step 1: To get started, visit EQ Bank here (unavailable in Quebec). Enter your name and email address to create your banking profile.

eqbank fhsa 1-img

A passcode will be sent to your email. Enter this code on the next page. Provide your phone number and verify it by entering the passcode received.

Step 2: Fill out the form to verify your identity by entering your home address, date of birth, and social insurance number.

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Fund your FHSA by connecting an existing chequing or savings account at another bank.

If you are a current EQ Bank client, the process is straightforward. Click on the “Open FHSA” button from your dashboard and follow the prompts.

eq bank fhsa 4-img

You can contribute up to $8,000 annually to your FHSA and up to a lifetime total of $40,000.

These contributions are tax-deductible, similar to RRSP contributions, and investment growth is tax-free (similar to the TFSA).

To be eligible for the FHSA, you must be a first-time homebuyer between 18 and 71 years of age.

EQ Bank FHSA Investments

EQ Bank currently offers two types of FHSAs:

  • EQ Bank FHSA Savings Account
  • EQ Bank FHSA GIC

The FHSA Savings Account offers a 3.00% interest rate, while the FHSA GIC pays up to 5.35%, depending on the term you choose (ranging from 3 months to 10 years).

Both accounts are eligible for CDIC deposit insurance, up to $100,000 per insured category, per depositor.

EQ Bank FHSA Fees

EQ Bank’s digital FHSA has no monthly account fees, similar to its other savings and GIC products.

If you overcontribute to your FHSA, the CRA will levy a monthly penalty tax of 1% on the excess contributions.

To avoid the overcontribution penalty, keep track of your contribution limit, especially if you have multiple FHSAs at different banks.

Benefits of the EQ Bank FHSA

The benefits of an EQ Bank FHSA include:

  • High interest rates on FHSA Savings and GICs.
  • No monthly account fees.
  • Fully digital application process.
  • Tax-deductible contributions and tax-free earnings and withdrawals.
  • FHSA to RRSP transfers are possible.

Downsides of the EQ Bank FHSA

  • It is not available in Quebec.
  • EQ Bank FHSA is limited to savings and GICs. It does not offer access to stocks, mutual funds, or bonds.

EQ Bank FHSA vs. RSP vs. TFSA

Here’s how EQ Bank’s FHSA, RSP, and TFSA accounts compare:

FHSARSPTFSA
Contribution limit$8,000 per year and $40,000 lifetime18% earned income in the previous year up to a limit ($31,560 in 2024)$7,000 in 2024 ($95,000 total since inception in 2009)
Over-contribution penalty1% monthly penalty on excess contributions1% monthly penalty on excess contributions over $ 2,000-lifetime buffer1% monthly on excess contributions
WithdrawalsTax-free for home purchasePay taxes on withdrawalsTax-free
Account expirationAfter 15 yearsConvert at age 71Does not expire
Tax-free gainsYesTax-deferredYes
Contributions tax deductibleYesYesNo
InvestmentsSavings deposits and GICsSavings deposits and GICsSavings deposits and GICs

EQ Bank FHSA Savings Account

EQ Bank logo

Top FHSA savings account

Earn 3% tax-free high interest on savings for your home

Contribute up to $8,000 annually and $40,000 lifetime

No monthly account fees

Also offers FHSA GICs (up to 5.05%)

FAQs

Does EQ Bank offer FHSA Accounts?

Yes, EQ Bank now offers FHSA Savings and GIC accounts.

What is the maximum contribution to a FHSA?

You can contribute up to $8,000 annually and $40,000 lifetime. Unused contribution room can be carried forward to future years.

Is the FHSA better than the TFSA?

If you are saving for a home, the FHSA offers more advantages than the TFSA. You can deduct contributions from your taxable income while also earning tax-free investment income.

What are the cons of the FHSA?

If you withdraw the funds for other purposes, withholding taxes may apply. Also, a second home does not qualify for the plan.

Can parents contribute to an FHSA?

Yes, parents can gift money to a child to contribute to their FHSA. The child can then claim a tax deduction for the amount.

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Author

Gravatar for Enoch Omololu, MSc (Econ)
Enoch Omololu, MSc (Econ)

Enoch Omololu, personal finance expert, author, and founder of Savvy New Canadians, has written about money matters for over 10 years. Enoch has an MSc (Econ) degree in Finance and Investment Management from the University of Aberdeen Business School and has completed the Canadian Securities Course. His expertise has been highlighted in major publications like Forbes, Globe and Mail, Business Insider, CBC News, Toronto Star, Financial Post, CTV News, TD Direct Investing, Canadian Securities Exchange, and many others. Enoch is passionate about helping others win with their finances and recently created a practical investing course for beginners. You can read his full author bio.

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