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If you’re a prospective B.C. first-time home buyer, the path to home ownership can be steep and bumpy. Some people have the benefit of financial help from relatives, but otherwise you’ll likely rely on a combination of strategy, sacrifice and professional guidance. Government assistance programs won’t replace the need for saving, but they can keep you moving in the right direction.
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 helps first-time home buyers reduce their closing costs. Specifically, the program can reduce or eliminate the land transfer tax (sometimes called a property transfer tax) buyers must pay.
As of April 1, 2024, you will be able to receive an exemption from the tax when you purchase a home worth up to $835,000[1]. You’ll pay no transfer tax on the first $500,000 of the home’s value, which can save you up to $8,000. You’ll still be able to get a partial exemption if your home is worth up to $860,000.
Prior to April 1, 2024, only homes valued at $500,000 or less are eligible for a full exemption, while partial exemptions are available for homes worth between $500,000 and $525,000.
To get a full exemption, you’ll also have to meet the following criteria before your closing date, including:
- 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.
- No previous receipt of the B.C. first-time home buyers’ tax break.
You may still be eligible for a partial exemption even if you’re buying a house with someone who is ineligible. For example, let’s say your spouse is ineligible because they once purchased and lived in a condo in Calgary. If you are splitting your home purchase 50-50, you can receive the exemption on your half of the home’s value.
» 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 $2,239,000 (or $2,279,000 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
Purchasing a new build or pre-construction home in B.C. can open you up to another assistance program.
The Newly Built Home Exemption[3] may reduce or erase the property transfer tax you pay when purchasing a freshly constructed home. As of April 1, 2024, newly built properties worth up to $1.1 million that sit on 1.24 acres of land or less may qualify for a full exemption from the tax. (The previous limit was $750,000.) 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
As of April 16, 2024, the Home Buyers’ Plan will allow you to take up to $60,000 out of an eligible registered retirement savings plan, or RRSP, so you can put it toward the down payment of your primary residence[4]. The previous HBP withdrawal limit was $35,000.
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 they have to be repaid 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’re allowed to 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 — and frustration
As a first-time buyer in B.C., you’ll have to navigate two forces that are beyond your control: insufficient supply and stubbornly high home prices.
At the end of October 2023, there were about 32,000 housing units for sale across all of B.C., according to the British Columbia Real Estate Association, which also called this figure “low by historical standards”. Those homes 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 outbid by 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.
Real estate activity in B.C. has calmed since the pandemic era frenzy, but prices remain high. The average price in October 2023 was $968,786. (Homes worth $1 million or more require down payments of at least 20%.) So long as housing supply remains constrained, it’s unlikely that prices in B.C. will decline.
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.
Mortgage rates in B.C. are, like those in other provinces, sky-high. An elevated mortgage rate can decrease your buying power significantly while driving up the cost of your monthly mortgage payment. You’ll want to set realistic expectations around the mortgage you can actually afford. It might be smaller than you think.
High mortgage rates also mean passing a more stringent mortgage stress test. 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 6.5%, for example, your finances will have to support the same mortgage at 8.5%. That can be a high standard for anyone to meet, let alone a first-time buyer.
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 less than $500,000, your down payment must be at least 5% of the purchase price. 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 April 12, 2024.
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Government of British Columbia, “ Home owner grant,” accessed April 12, 2024.
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Government of British Columbia, “Newly built home exemption,” accessed April 12, 2024.
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Department of Finance Canada, “Putting home ownership back within reach and supporting Canadian homeowners,” accessed April 12, 2024.
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