How to Open and Use your First Time Homebuyer Saving Account (FHSA)
August 26, 2024
1 min read
Did you know that there is a dedicated savings account just for first-time homebuyers? First Time Homebuyer Savings Accounts (otherwise known as FHSAs), or “First Home Savings Accounts” are a longstanding popular concept in Canada and have recently been introduced in the US to help offer incentives for Americans saving for their first homes. Designed to provide a range of benefits, including tax advantages, competitive interest rates, and exclusive savings opportunities, FHSAs are an invaluable resource for those preparing to purchase their first home. In this guide, we’ll explore everything you need to know about FHSAs, from opening an account to effectively using it to reach your homeownership goals.
What is a First Home Savings Account (FHSA)?
A First Home Savings Account (FHSA) is an interest-bearing savings account tailored specifically for first-time homebuyers. Its primary aim is to help individuals save for their first home by offering a variety of advantages such as tax benefits, rewards, and flexible savings options. Unlike other savings vehicles, FHSAs provide a dedicated account that ensures your funds are set aside for a specific purpose—buying your first home.
The FHSA is available nationwide to any aspiring homeowner who does not currently own a home and has not owned a primary residence in the past three years. The tax deductions associated with FHSAs are currently offered in twelve states: Alabama, Michigan, Virginia, Iowa, Oregon, Missouri, Mississippi, Colorado, Minnesota, Montana, Utah, and South Carolina. With FHSAs, you can benefit from a structured approach to saving, making it easier to reach your homeownership goals.
How to Open an FHSA
We created Foyer to help aspiring buyers become homeowners faster and with more confidence. In addition to an industry-leading APY with interest payments made monthly, Foyer offers the Foyer Match where we match your deposits at 2% or 5%. 3
1. Choose the Right FHSA Provider
Foyer is an excellent choice for opening your FHSA, thanks to its competitive Annual Percentage Yield (APY) and unique features. Foyer offers the Foyer Match, where they match your deposits at 2% or 5%, depending on your account level.
2. Open Your Foyer Account
You can open a Foyer account quickly and easily. Visit the Foyer website or download the Foyer app from the iOS App Store or Google Play Store. The account setup process takes just about 5 minutes. After making your initial deposit, you’ll start earning interest and benefit from the Foyer Match right away.
3. Fund Your FHSA
To activate your Foyer account, deposit a minimum of $100 within the first 60 days. Additionally, you can receive an extra $100 in Foyer Rewards when you set up recuring or direct deposit.
How to Use Your FHSA
Once your FHSA is set up, it’s time to make the most of it. Here’s how you can effectively use your account to maximize savings and reach your home buying goals:
1. Make Regular Contributions
Contribute regularly to your FHSA to benefit from both the Foyer Match3 and the accrued interest1. Foyer matches deposits up to $10,000 per year in contributions, so aim to deposit at least this amount annually. Consistent contributions will help you grow your savings more effectively.
2. Use Foyer’s Calculator Tools
Foyer provides calculator tools to help you determine a realistic monthly savings target. These tools take into account your budget, financial goals, and current situation, ensuring you set a savings plan that works for you.
3. Set Up Recurring Transfers
To stay on track with your savings goals, set up recurring transfers or direct deposits. This automated approach ensures you never miss a contribution, helping you reach your home buying target more efficiently.
4. Work with Foyer Partners
At Foyer, we've established partnerships with pre-vetted real estate agents and mortgage lenders around the country. By working with Foyer’s network, you can access significant savings and discounts on closing costs. These partnerships can save you up to $8,700 at closing, providing added buying power during your home buying process!
5. Track and Redeem Foyer Rewards
Keep your Foyer app updated to receive relevant information about your home buying journey. You can unlock and redeem Foyer Rewards into cash by uploading a purchase contract in your Foyer app.
Frequently Asked Questions
Q: What happens if I don’t use my savings account funds for a home purchase?
A: You can withdraw your contributions at any time without penalty should you decide not to purchase a home or to need it for an emergency, as long as you keep $100 or more in your Foyer account, it can remain open.
Q: Can I have multiple accounts for home savings?
A: Of course, we recommend consulting with your financial advisor about the strategies that will work best for your personal financial situation. We recommend contributing at least $10,000 per year to Foyer to maximize your reward value. Your Foyer account can be used for anything related to the homebuying process including your down payment, closing costs, inspection and maintenance fees, etc.
Q: How does this account impact my taxes?
A: You will not be taxed on Foyer Rewards but you may be taxed on interest payments, depending on which state you’re in. Foyer will send you a tax document at the end of every calendar year as required.
If you’re preparing to buy your first home, opening an FHSA with Foyer can be a huge accelerator to reaching your goal. With its competitive interest rates, valuable rewards, and user-friendly features, Foyer makes saving for homeownership more accessible and effective and helps you plan for your home purchase more confidently. Don’t wait—sign up for a Foyer account today and take the first step towards owning your dream home.
By understanding the benefits and processes associated with FHSAs, you’ll be well-equipped to manage your savings and achieve your home buying aspirations.
