Clay Jarvis
Kurt Woock
Beth Buczynski
If you’re a prospective B.C. first-time home buyer, the path to home ownership can be steep and bumpy. Buyers in B.C. can use the programs below to reduce the overall cost of becoming a homeowner.
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B.C. First-Time Home Buyers’ Program
The B.C. First-Time Home Buyers’ Program reduces or eliminates the land transfer tax (sometimes called a property transfer tax) for qualified buyers.[1]
To qualify for the maximum exemption of $8,000, your home must be worth no more than $835,000. In practice, that means you’ll pay no land transfer tax on a home valued up to $500,000. Homes worth between $500,000 and $835,000 will have $8,000 knocked off the bill, but you’ll end up paying some tax.
You’ll still receive an exemption if your home is worth up to $860,000, but it gets smaller the closer you get to $860,000: A home worth $859,000, for example, gets a land transfer tax exemption of $320.
To qualify you also must:
- Be a permanent resident of Canada or a Canadian citizen.
- Have either lived in B.C. for at least the last 12 months or filed at least two income tax returns in the province in the last six taxation years.
- Never previously owned a property that could be considered your principal residence — anywhere in the world, ever.
- Have no previous receipt of the B.C. first-time home buyers’ tax break.
» MORE: Crunch the numbers with our land transfer tax and fee calculator.
B.C. Home Owner Grant
Another tax-focused program, the B.C. Home Owner Grant, offers eligible homeowners (any homeowner — not just first-time buyers) an annual reduction in property taxes of up to $770.[2] If your property is in the Victoria region, Metro Vancouver or the Fraser Valley, the grant tops out at $570.
To receive the full grant, your home’s assessed value can’t exceed $2,125,000. If your home is worth more than the threshold amount, your grant will be reduced by $5 for each $1,000 over the threshold. Homes valued above $2,264,000 (or $2,304,000 in a rural, northern area) are ineligible for grants.
To qualify, you must:
- Live in B.C.
- Be a Canadian citizen or permanent resident.
- Be either the registered owner of the home or the spouse or relative of its deceased owner.
- Use the property as your principal residence.
Newly Built Homes Exemption
The Newly Built Home Exemption may reduce or erase the property transfer tax you pay when purchasing a freshly constructed home worth up to $1.1 million that sit on no more than 1.24 acres of land.[3] Homes worth between $1.1 million and $1.15 million that are built on lots greater than 1.24 acres may receive a partial exemption.
These provincial programs cut costs after you buy. If you need help with the upfront costs of purchasing a home — most notably a down payment — you may need to turn to the feds.
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Federal programs first-time home buyers in B.C. can use
There are several federal programs that can help first-time home buyers in B.C. either increase their purchasing power or save a little money after becoming a homeowner.
Home Buyers’ Plan
The Home Buyers’ Plan allows you to take up to $60,000 out of an eligible registered retirement savings plan, or RRSP, to put toward the down payment of your primary residence.[4]
In order to qualify, you must:
- 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.
Any funds you take out of your RRSP are tax-free, but you must repay them within 15 years.
If these programs won’t work for you, there are a few more federal first-time home buyer grants and assistance programs worth investigating, including an easy-to-claim tax credit.
First Home Savings Account
The First Home Savings Account (FHSA) is a savings and investment tool to help first-time home buyers boost their down payment savings.
You can contribute up to $8,000 per year to an FHSA, up to a maximum of $40,000. The contributions, which are tax-deductible, can be used to purchase investment products — stocks, bonds, GICs — that might increase your savings more rapidly. The earnings these investments generate are tax-free.
First-Time Home Buyers’ Tax Credit
The First-Time Home Buyers’ Tax Credit, also known as the Home Buyers’ Amount, is a non-refundable credit of $10,000 for first-time home buyers. It results in a tax rebate of up to $1,500.
This isn’t the kind of assistance that will help you buy a house or qualify for a mortgage, but it will make that first year of homeownership a little more affordable.
GST/HST New Housing rebate
If you purchase or build a new house, or significantly renovate your primary residence, you could recoup some of the Goods and Services Tax (GST), or the federal portion of the Harmonized Sales Tax (HST), that you paid.
Different rules apply depending on property type and location, so make sure the new home you have your eye on is eligible for a rebate.
Approaching the B.C. market as a first-time home buyer
Prepare for competition
At the end of September 2024, there were 42,641 housing units for sale across all of B.C., according to the British Columbia Real Estate Association. That’s significantly more than a year before, but still well below long-term averages.
The limited number of homes available in B.C. aren’t just for B.C. residents to bid on; they’re also popular targets for out-of-province investors and retirees, as well as new arrivals from other countries.
You could be competing against experienced, well-capitalized buyers with the ability to increase both their down payments and offers. It’s important not to get discouraged when this happens. It’s also important not to get drawn into a bidding war you can’t afford to win.
Boost your down payment and strengthen your finances
First-time home buyers are subject to the same down payment rules as everyone else. You must provide at least a 5% down payment on properties that cost less than $500,000. If the property you have your eye on costs more than that — and most homes in B.C. do — your down payment will have to be higher.
While saving up a down payment, you should also try to pay down as much debt as you can afford. Lenders look very closely at your debt service ratios, which indicate how much of your income goes toward debt each month. If those ratios are too high, you may not be approved for the mortgage you want.
If the dual challenges of saving while paying down debt is daunting, speak to your bank’s mortgage advisor or a mortgage broker early on in your home buying journey. An experienced mortgage professional can run the numbers for you, tell you how much mortgage you can afford and possibly pre-approve you for that amount. They can also give you strategies for strengthening your overall finances before applying for a loan.
You can also run estimates on your own using a mortgage calculator.
Familiarize yourself with the B.C. mortgage market
Finding a home is one thing; getting it financed is another. As a first-time home buyer in B.C., you’ll want to get a sense of what’s in store for you as a first-time mortgage holder, too.
Explore current mortgage rates in B.C., which play a large part in determining how much house you can afford. Knowing where rates are can help you set realistic expectations around the mortgage you might qualify for.
The mortgage stress test might also put a cap on how much you can borrow. Canada’s lending rules dictate that you must be able to qualify for your mortgage at a rate 2% higher than what you’re actually offered. If you’re hoping to get approved at a rate of 4.5%, for example, your finances will have to support the same mortgage at 6.5%.
Understand how different choices affect your mortgage
You don’t have much power over mortgage rates, but you will have to make several choices that can impact the cost of your home loan, including:
- Whether it’s an open or closed mortgage.
- If a variable or fixed mortgage rate is better for you.
- How long your amortization period should be.
Other details, like a lender’s prepayment privileges and prepayment penalties, are important things to discuss with a mortgage professional.
The bottom line for first-time home buyers in B.C.
Buying your first home in B.C. might be challenging, but it shouldn’t be impossible, especially if you follow these tried and true first-time home buyer tips:
- Create a budget to keep your down payment savings on track.
- Eliminate any unnecessary spending.
- Generate as much income as possible.
- Keep an eye on the market to see if competition is heating up or easing.
- Get guidance from professionals who understand both the real estate and mortgage landscapes, such as a real estate broker or a realtor.
Buying your first home in B.C. requires patience and dedication, so don’t take it personally if the market doesn’t cooperate. There’s nothing wrong with delaying your plans until buying a home fits more comfortably in your budget.
Frequently asked questions about B.C. first-time home buyers
First-time home buyers in B.C. have to follow the same down payment rules as everyone else. For a home worth between $500,000 and $1 million, your down payment must be at least 5% of the first $500,000 and 10% of the remaining amount. Homes worth $1 million or more require down payments of 20%. Your lender may require you to make a larger down payment depending on a home’s price and your financial situation.
Eligible first-time buyers can access the B.C. First-Time Home Buyers Program, the B.C. Homeowner Grant and the Newly Built Homes Exception. They can also use federal programs like the First-Time Home Buyer Incentive, Home Buyers Plan and the First Home Savings Account.
Article Sources
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Government of British Columbia, “First time home buyers' program,” accessed October 8, 2024.
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Government of British Columbia, “ Home owner grant,” accessed November 6, 2024.
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Government of British Columbia, “Newly built home exemption,” accessed October 8, 2024.
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Department of Finance Canada, “Putting home ownership back within reach and supporting Canadian homeowners,” accessed October 8, 2024.
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