Buying your first home in Vancouver can feel daunting. Prices are high, the process has many moving parts, and the rules seem to change every year. The good news is that first time buyers in British Columbia have more support than most people realise, and a little preparation goes a long way. Here are five tips to help you buy with confidence.
1. Get pre approved, and understand the stress test
Before you fall in love with a listing, find out what you can actually borrow. A mortgage pre approval tells you your price range and locks a rate for a set period. Remember that Canadian lenders must qualify you under a stress test, meaning you need to show you could afford payments at a rate roughly two percentage points above your contract rate, or the qualifying floor, whichever is higher. Budgeting to that higher number keeps you comfortable if rates move.
2. Use every first time buyer program you qualify for
British Columbia and the federal government offer real savings for first time buyers. Take the time to understand each one:
- BC First Time Home Buyers’ property transfer tax exemption. Eligible buyers pay no property transfer tax on homes up to 500,000 dollars, with a partial exemption that phases out up to 835,000 dollars. On a typical purchase that can save thousands of dollars at closing.
- Newly Built Home exemption. If you buy a brand new home, a separate exemption offers full relief up to 1,100,000 dollars, which can make new construction surprisingly competitive.
- First Home Savings Account, or FHSA. This registered account lets you contribute up to 8,000 dollars per year, to a lifetime limit of 40,000 dollars. Contributions are tax deductible and qualifying withdrawals for your first home are tax free.
- Home Buyers’ Plan. You can withdraw up to 60,000 dollars from your RRSP toward a first home, repaid over time, which can be combined with the FHSA for a larger down payment.
Eligibility rules apply to each program, so confirm the current details before you count on them.
3. Budget for the full cost, not just the price
The sticker price is only the beginning. Set money aside for closing costs such as legal or notary fees, property transfer tax if it applies to you, a home inspection, title insurance, and moving expenses. If you are buying a strata home, factor in monthly maintenance fees and review the depreciation report. New homes may also carry GST. Knowing the true all in cost protects you from surprises on completion day.
4. Know the neighbourhoods, and look at newer options
Where you buy matters as much as what you buy. Visit at different times of day, check transit and commute routes, and think about how the area fits your life over the next five to ten years. It is also worth looking at newer forms of housing. Recent provincial rules allow more homes on traditional single family lots, from secondary suites to laneway homes and small multi unit projects, which is bringing fresh, well designed options to established neighbourhoods.
5. Build a team you trust
A good first purchase is rarely a solo effort. A knowledgeable realtor, a mortgage broker who can compare lenders, and a real estate lawyer or notary will each save you money and stress. If you are buying new, take time to understand the builder and the standard of finish you can expect. The right people around you turn a stressful process into a clear one.
Take the first step
Buying your first home is a big milestone, and it is very achievable with the right preparation. Get your finances in order, learn the programs available to you, and lean on professionals who know the local market. When you are ready to see what a carefully built home feels like, we would be glad to help you find one.
This article is general information and not financial, tax, or legal advice. Program thresholds and eligibility rules change, so confirm the current details with the Province of British Columbia, the Canada Revenue Agency, or a qualified advisor before you rely on them.
