British Columbia first-time home buyer guide 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.

Who qualifies as a first-time buyer in B.C.?

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.

What are the ways to prepare as a first time home buyer in British Columbia?

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.

Housing supply and prices

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.

Down payment and finances

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.

Local real estate activity

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.

Are there first-time home buyer programs in British Columbia?

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.

BC First-Time Home Buyers’ Program

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.

To qualify:

• Be a Canadian citizen or permanent resident
• Have either:
  • Lived in B.C. for at least a year immediately before the date you register the property
  • Filed at least 2 income tax returns as a B.C. resident in the last 6 taxation years immediately before the registration date
• Have never owned a registered interest in a property that was your principal residence anywhere in the world at any time
• Have never received a first time home buyers’ exemption or refund

and the property must:

• Only be used as your principal residence
• Have a fair market value of $500,000 or less
• Be 0.5 hectares (1.24 acres) or smaller

Read more about the B.C. First-Time Home Buyers’ Program

B.C. Newly Built Homes Exemption

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:

• A house constructed and affixed on a parcel of vacant land
• A new apartment in a newly built condominium building
• A manufactured home that is placed and affixed on a parcel of vacant land
• An already constructed house that is removed from one parcel of land and affixed to another parcel of vacant land, as long as the house hasn’t been occupied since it was placed on the new parcel of vacant land
• A house resulting from the division of an existing improvement affixed to a parcel of land that was also subdivided, as long as this house hasn’t been occupied since the subdivision of the parcel
• A house converted from an existing improvement on the land. The previous improvement couldn’t have been used as residential (e.g. a warehouse converted into apartments)

Read more about the B.C. Newly Built Homes Exemption

Are there federal programs for first time home buyers in B.C.?

The First-Time Home Buyer Incentive

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:

• You plan on purchasing your first home that you will occupy as your primary residence
• You’ve recently experienced a breakdown of a marriage or common-law partnership. This applies even if you don’t meet the other first-time home buyer requirements
• You’re not living in a home that you or your current spouse or common-law partner owned in the previous 4-year period

Read more about the FTHBI

The Home Buyers’ Plan

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.

To qualify:

• Be a first-time buyer.
• Be a resident of Canada from when you withdraw the funds until your home is bought or built.
• Intend to use the home as your principal residence within a year of buying or building it.

Read more about The Home Buyers’ Plan

Local homeownership programs and other grants

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.

• The BC home owner grant reduces the amount of property tax you pay for your principal residence. The grant is available to homeowners who pay property taxes to a municipality, or to the province if they live in a rural area. If you qualify, you can get an annual reduction in property taxes of up to $770. If your property is in the Victoria region, Metro Vancouver or the Fraser Valley, the grant is a maximum of $570. To receive the full grant, your home’s value will have to be assessed at $1,975,000 or less.
• Clean BC Better Homes and Home Renovation Rebate Program. The provincial government in British Columbia offers various rebates for homeowners who do select renovations on their home including heat pumps, furnaces, boilers, and insulation. The rebate amount is up to $6,000.
• BC Energy Step Code Program. Various municipal regions in British Columbia offer this program which includes incentives for new homes built to specific energy efficiency guidelines. You can view if your specific city supports the program here.
• The Greener Homes Grant is a federal grant for homeowners who put in specific renovations in their home including insulation, windows, doors, and heating systems. The grant is a rebate of up to $10,000 towards the cost of your renovations. There are more details on the government page but these grants are specifically incentivizing renovations that reduce energy use or increase your home’s efficiency, such as air sealing, insulation, replacing windows and doors or installing a heat pump.
• The GST/HST new housing rebate is a tax rebate available for buyers of new housing builds or substantially renovated homes from a builder. This rebate is only available if the home is your primary residence and the value of the home is less than $450,000. If you are eligible for this rebate you will receive back the federal portion of the tax paid for your home.

Are there any other B.C. first-time home buyer tips?

Aside from exploring different programs and grants, here are a few other tips to help you on your homeownership journey.

• Keep an eye on the market that you are looking at to see if competition is increasing or easing.
• Create a budget and stick to it so that you can keep your savings for a down payment on track.
• Have realistic expectations and don’t be discouraged if you can’t buy right away. You can try again when buying a home fits more comfortably into your budget.
• Follow a home buying guide to ensure that you don’t miss any important steps.
• Always get help from a real estate and mortgage professional. They can help you avoid common mistakes and make the process much more simple and hassle free.