Last updated: May 16, 2023
If you’re a first time home buyer in British Columbia, there are ways to improve your affordability and prepare for a competitive market such as applying for provincial and federal incentive programs and working with a mortgage advisor to help you avoid common mistakes.
It’s important to understand what being a first time home buyer in B.C. means, especially if you are looking into applying to any of the provincial assistance programs.
To qualify as a first-time home buyer in B.C., you must have never owned or had an interest in a home anywhere in the world previously. Keep in mind that this qualification might vary depending on the program you are applying for.
Becoming a homeowner is not always easy but there are ways to prepare yourself so that you can be ready to buy a property when the time comes. It’s important to set realistic expectations by understanding the market you are going into, and know what financial areas that you need to improve or focus on by speaking to a mortgage advisor.
Have realistic expectations when it comes to housing prices and supply, especially in the area that you are looking to buy in. According to the British Columbia Real Estate Association, there were 7,118 residential unit sales in March 2023 and the average residential price was $941,451, with the total sales dollar volume being 6.8 billion. The average home price in B.C. has risen two months in a row as of April 2023. Highly priced houses will require larger mortgages to finance them as well as larger minimum down payments.
In Canada, buyers must provide at least a 5% down payment on a home if it costs less than $500,000. If the property is more than $500,000, you will be required to have a larger down payment. This is a good time to speak to your mortgage advisor and strategize on ways to strengthen your overall finances before applying for a mortgage. Mortgage advisors also have connections with different lenders and can find you a better rate than most banks.
You can also use our qualifier tool to evaluate your ability to afford your target property.
Another key person to connect with is a reputable real estate agent for the area that you are interested in and let them know your goals and spending limits. They will look at recent sales activity and help you understand the market you want to get into and how competitive it is. They will help you feel prepared to buy your first home and explain what growth potential it has.
Yes! There are several programs in B.C. that you can use if you are a first-time home buyer to help you save some money. Be sure to look into the qualifications before you apply.
The first time home buyers’ program reduces or eliminates the amount of property transfer tax you pay when you purchase your first home. If you qualify for the program, you may be eligible for either a full or partial exemption from the tax. If you qualify, you can receive the full $8,000 exception from the tax if the home you purchase is valued at $500,000 or less. You can still get a partial exemption if it’s worth up to $524,000, but any home worth $525,000 or more will cost you $8,500 in land transfer tax.
and the property must:
Read more about the B.C. First-Time Home Buyers’ Program
Newly Built Homes Exemption reduces or eliminates the amount of property transfer tax you pay when you purchase a newly built home or pre-construction. Properties worth less than $750,000 may qualify for a full exemption of $13,000; those worth between $750,000 and $800,000 may receive a partial exemption.
A newly built home includes:
Read more about the B.C. Newly Built Homes Exemption
If you are a Canadian first-time home buyer, you might be eligible to sign up for the First-Time Home Buyer Incentive (FTHBI) program, which provides financial assistance for first-time home buyers. The FTHBI is a shared equity program which allows first time home buyers to borrow up to 10% of the home value towards their down payment. This incentive will reduce the cost of borrowing by lowering your mortgage insurance and interest costs.The loan is interest-free, but if you’re approved, the government will own a portion of your home equity.
You can use our first-time home buyer calculator to calculate whether the FTHBI program will be beneficial to you.
In order to qualify, you must meet the government’s definition of a first-time home buyer:
Read more about the FTHBI
The Home Buyer’s Plan allows you to withdraw up to $35,000 tax free from your RRSP, to help either purchase or build a home for yourself or a related person with a disability. Normally contributions to an RRSP are taxed at your marginal income rate and are subject to early withdrawal fees if taken out before you turn 60. If you are buying a home with a partner, they can also withdraw up to $35,000, allowing you a total of $70,000. In order to keep this RRSP withdrawal tax-free, you need to pay back the funds within a 15-year period.
Read more about The Home Buyers’ Plan
Here are a few other programs and grants that are available in some B.C. municipalities. Although these aren’t specifically for first-time home buyers, you might be able to apply if you meet certain criterias.
Aside from exploring different programs and grants, here are a few other tips to help you on your homeownership journey.