First-Time Home Buyer Guide for British Columbia

Key Takeaways

• Take advantage of all 3 incentives: Combine the FHSA, RRSP Home Buyers’ Plan, and Property Transfer Tax exemption to save thousands.
• Know your down payment tiers: You only need 5% down for homes under $500K. Above that, the rate increases based on the price.
• Budget for closing costs and get pre-approved: Plan for 1.5-4% in extra fees, and get pre-approved early to boost your buying power.

Congrats on Taking the First Step to Home Ownership!

From saving for a down payment to applying for government incentives, I’ve created this guide for you to break down what you need to get started as a first-time home buyer in British Columbia.

• Learn what qualifies you as a first-time home buyer in BC
• Explore down payment options and minimum requirements
• Understand which government incentives you may qualify for

Who Qualifies as a First-Time Home Buyer in BC?

To qualify for most first-time buyer programs in British Columbia, you must:

• Be a Canadian citizen or permanent resident
• Have never owned a principal residence in Canada or anywhere else in the world
• Be purchasing the home to live in it (so you cannot purchase it as a rental or investment)
• Occupy the home within 92 days of closing.

Note: some programs define “first-time” differently, be sure to check the fine print for individual program rules or reach out and I can lend a hand!

How Much Do I Need for a Down Payment?

In British Columbia (and across Canada), your minimum down payment ultimately depends on the price of the home itself.

First-Time Home Buyer Incentives and Programs in BC

Purchasing a home can feel quite difficult in today’s market, but thankfully, there are several programs out there catered to first-time home buyers, making the process feel a lot more feasible.

• First Home Savings Account (FHSA)
  This relatively new program was introduced in 2023. The FHSA lets you save up to $8,000 per year (up to a total of $40,000) tax-free. Contributions to your FHSA are also tax-deductible, and withdrawals are tax-free when used for a home purchase.
  
  This means you can reduce your income tax directly by contributing to the account, helping you save even more each year. When you're ready to buy your first home, you can then withdraw the funds (plus any investment growth) without paying tax as long as the money is used for a home purchase (subject to the qualifications listed in “Who Qualifies as a First-Time Home Buyer in BC”).
• RRSP Home Buyers’ Plan (HBP)
  The HBP is a government program that helps first-time homebuyers access their own savings to purchase a home. Here's how it works:
  - In essence, you can withdraw up to $60,000 from your Registered Retirement Savings Plan (RRSP) without paying any taxes during that time of withdrawal.
  - Normally, when withdrawing from your RRSP, you would be paying a certain amount of income tax. However, the HBP gives you a temporary exception since you will be using those funds to either buy or build your first home.
  - The catch: you must repay the amount you withdraw over a period of up to 15 years. Basically, each year you will repay 1/15th of the amount; otherwise, it will be added to your taxable income for that year.
  
• BC Property Transfer Tax (PTT) Exemption
  When purchasing a home in British Columbia, you’re typically required to pay what’s called a Property Transfer Tax (PTT) at the time of purchase. This tax can add thousands of dollars to your closing costs. That being said, if you’re a first-time home buyer in BC, you may qualify for a full or partial exemption.
  
  Full Exemption:
  You won’t have to pay any PTT if all the following apply;
  - The home is priced at $500,000 or less
  - You are a Canadian citizen or permanent resident
  - You have never owned a home in Canada or anywhere else in the world
  - You will live in the home as your principal residence (not rent out or use as an investment)
  
  Partial Exemption:
  If the home is priced between $500,001 and $525,000, you may still qualify for a partial exemption. This reduces the amount of tax you pay rather than entirely eliminating it. So the higher the purchase price within the range, the smaller the overall exemption.
  
  How much is PTT normally?
  The standard PTT in BC is:
  - 1% on the first $200,000 of the home’s price
  - 2% on the portion between $200,000 and $2,000,000
  
  For example, a home that is priced at $500,000 - the PTT would normally be $8,000. This makes the exemption a significant savings for first-time home buyers.
  

So, Should You Use One or All Three?

As a first-time homebuyer in British Columbia, it’s wise to use all of the resources you can. So the best move would be to take advantage of all three programs if you’re eligible. Combining the tax-deductible FHSA, the RRSP Home Buyer’s Plan, and the BC Property Transfer Tax exemption can significantly reduce your upfront costs and long-term taxes. 

In fact, these programs are actually designed to work together, helping you save more, pay less, and making home ownership more achievable. Always consult a mortgage professional to ensure you’re maximizing each benefit based on your situation. I’m always happy to chat, reach out using my contact form, and I’ll answer your questions at no cost within 24 hours!

What Are the Closing Costs?

You’ve saved for your down payment and may have already secured financing - but don’t forget about closing costs. These extra expenses come with finalizing your home purchase and are one-time fees that are due on or before the day you take possession of your new home, and they can add up quickly.

What’s Typically Included in Closing Costs?

• Legal Fees ($1,000 - $2,000)
  A real estate lawyer or notary is required to handle the legal paperwork, register the property, and ensure that each and every transaction is processed correctly.
• Appraisal Fee (~$300 - $500)
  If you’re getting a mortgage, your lender may require a home appraisal to confirm the actual value of the property.
• Property Transfer Tax (PPT)
  If you’re a first-time home buyer, you can skip this part! Otherwise, this provincial tax can cost thousands - 1% on the first $200,000 and 2% on the portion up to $2,000,000.
• Title Insurance (~$200 - $400)
  This protects you and your lender against issues with the property title, such as fraud or any errors within the public records - certainly worth the cost.
• Land Title Registration Fee (~$75-$150)
  This fee covers the cost of officially registering you as the new owner in the BC Land Title Office.

As a word of advice, even if you qualify for all the aforementioned programs, you should still budget about 1.5% to 4% of the home’s price for these required but necessary closing costs on completion day.

Get Pre-Approved for a Mortgage

Before you fall in love with your dream home, make sure you know exactly what you can afford. Getting pre-approved for a mortgage is one of the smartest first steps in the homebuying journey.

Here’s why it matters:

• Knowing your budget
  A pre-approval gives you a clear idea of how much a lender is willing to offer. This is based on a variety of items such as your income, credit scores, and outstanding debts. This can save you a ton of time and stress in the long run, as it helps you narrow your search to homes within your price range.
• Make Stronger Offers
  Sellers are more likely to take your offer seriously if you’re pre-approved and can be the “make or break” in a multiple offer scenario, as it shows you’re financially ready and can move quickly when it counts.
• Speeding up the Closing Process
  A pre-approval means most of your paperwork is already reviewed, which makes the final mortgage approval that much faster once you’ve found your dream home.

Pro Tip: Don’t just settle for the first rate you see. Compare offers from different lenders, or work with a licensed mortgage professional who can shop around for you. I have access to rates from 90+ lenders, including banks, credit unions, and alternative institutions. Even a small difference in interest rate can save you thousands over the life of your mortgage.