First Time Home Buyer BC Down Payment

If you’re a first time home buyer in BC and looking for down payment information then you’ve come to the right place! This blog goes through the basics of a down payment and what to expect when buying your first home.

What is a down payment?

A down payment is the amount of funds that you as a buyer put towards your home’s purchase. In a real estate transaction, the purchase price less the amount of your down payment will be funded by a mortgage.

What is a deposit?

The deposit is the amount of money that is paid once a real estate transaction goes firm (subject removal completed), that is held in trust as collateral in the case that you do not complete on the purchase. The deposit forms a part of the down payment.

What are the minimum down payment rules in BC?

The minimum down payment rules in Canada are as follows:

• Purchase price of $500K or less: Minimum 5% down payment
• Purchase price of less than $1.5M: 5% on the portion under $500K, 10% on the portion between $500K-$1.5M
• Purchase price $1.5M or above: 20% down payment total
• Investment properties: 20% down total

Some examples of minimum down payment rules are as follows:

Example Minimum Down Payment BC #1: A home that is worth $500,000

• Therefore, numerically the minimum down payment on a $500,000 purchase price is $25,000.

Example Minimum Down Payment BC #2: A home that is worth $900,000

• Therefore, on $900,000 purchase, you would pay $25,000 to cover the minimum for the 1^st $500K, and then $50,000(10%) for the amount between $500,000 and $1.5M (10% of $400,000).
• Total $65,000 as a minimum down payment for a home purchased for $900,000.

Example Minimum Down Payment BC #3: A home that is worth $1,700,000

• For example, on a purchase of $1,700,000, the down payment of 20% would be calculated on the entire balance – not on a sliding scale.
• Total minimum down payment in this scenario is $340,000.

When is a down payment due?

The down payment is due at the time of completion, as these are the funds used to purchase the subject property.

This is different from the deposit, which is typically due within 24 hours of subject removal.

If you’re looking for important information on the difference between a deposit and down payment, then check out this blog: Deposit vs Down Payment

Down Payment Programs for First Time Home Buyers

RRSP Home Buyers Plan (HBP)

If you are a first time home buyer, you may be able to use funds from your RRSP account via the government’s Home Buyers Plan (HBP).

There are limits to the amount that you can take out as a first time home buyer, and there is a repayment period that you have to comply with in order to use those funds towards your purchase tax free.

Keep in mind that the money must be in your RRSP for at least 90 days before the purchase of your house for it to be valid.

For more information on the Home Buyers Plan, visit the government website: Home Buyers Plan

First Home Savings Account (FHSA)

A first home savings account (FHSA) is a government plan which allows first time home buyers to save up money in the FHSA tax free with plans to purchase their first home.

If you already set up a FHSA and are looking to access the funds for your first home purchase, this is something that a qualifying purchaser could do.

For more information on the FHSA, visit the government website: First Home Savings Account

For more programs, incentives, first time home buyer exemptions, and the most up to date information refer to the Government of Canada website.