Purchasing a home for the first time can be an overwhelming process. There are so many things to think about–from what kind of down payment you need, to what mortgage you can afford, unexpected costs, location, and more.

In this guide, we will answer all of your questions as a first-time home buyer in BC!

What kind of down payment do I need?

If you’re a first-time home buyer in BC, you may be eligible for a number of different down payment assistance programs. The most common program is the CMHC Mortgage Insurance program, which allows you to buy a home with as little as a 5% down payment.

You can also withdraw up to $35,000 from your RRSP tax-free to use as a down payment on your first home.

What kind of mortgage can I afford? 

For those just entering the real estate market, understanding mortgages can feel overwhelming. If you don’t understand how the process works, it may feel like you’re taking on a huge amount of debt. 

The good news is there are many easy-to-use mortgage calculators online that can help you get a general understanding of the kind of mortgage you can afford. Calculators can help you understand how your budget will work within a new mortgage and estimate your payment and amortization schedules.

It’s always a good idea to determine how much you are comfortable paying before you buy. We suggest creating a budget to include the estimated costs for your new home,  including payments such as a mortgage, strata fees, property tax, utilities and insurance. As well, try to save these costs in a separate account for at least one to two months to make sure it fits comfortably within your budget and lifestyle.

To get an official quote, you’ll need to speak with a dedicated Financial Institution. They will be able to tell you exactly what mortgage amount you can be approved for and how to get started with the process.

What unexpected costs are involved in buying a home?

When saving up for your first home, it’s important to remember that in addition to the down payment, you will need to have extra funds available to pay for closing costs. These can include the property transfer tax and legal fees at the time of your purchase.

Luckily, as a first-time home buyer in BC, you may be exempt from property transfer tax on your first home, up to a maximum purchase price of $500,000. This can work out to savings of up to $8,000 on your first home! Talk to your financial advisor to see if you qualify.

Is location important when buying your first home?

If you’re a first-time home buyer in BC, you may be wondering where you should buy your home. Do you want to live in the city? The suburbs? Maybe you want a rural property, a house with a yard, or an apartment with a view of the mountains.

There are many things to consider when making this decision, such as your budget, lifestyle, and where you work. If you need access to public transit, you’ll want to live in an area that has good bus or SkyTrain service. If you have a family, you may want to buy a home in a neighbourhood with good schools.

The best way to figure out what’s important to you is to make a list of your must-haves and nice-to-haves. Once you know what you’re looking for, you can start narrowing down your search.

If you’re not sure where to start, try entering your desired address into www.walkscore.com. This website will show you how walkable an area is, as well as the public transit options available.

Should I budget for repairs and maintenance?

Alongside property tax and legal fees, you will also need to factor in the cost of moving and any necessary renovations or repairs to your new home. Even though a home is new to you, it may not be new-new. Upgrades to appliances, paint, roofs, windows, and floors may be required, so don’t forget to account for those costs in your budget!

It’s a good idea to set up a “house account” where you can save for these costs in advance. This will help you avoid being taken by surprise by unexpected repairs or renovations.

According to a report by the CMHC, homebuyers should expect to spend an additional one to 5% of their home’s purchase price on repairs and maintenance.

Vancity is currently offering $3,000 cash back on eligible mortgages. Click here for more details!

Common mistakes first time home buyers make

One of the most difficult things about being a first-time homebuyer is not knowing what to expect. It is easy to get caught up in the excitement of buying a home and forget about some of the more important details, like reviewing strata documents or understanding your mortgage options.

Here are a few common mistakes first-time homebuyers make and tips to avoid making them yourself.

Using entire budget on down payment and closing costs

One common mistake first-time homebuyers make is using their entire budget on the down payment and closing costs. While it is important to have money saved up for these expenses, it is also important to set aside some money for unexpected repairs or upgrades. Furniture, decor, new paint, and other incidentals can also add up quickly.

Tip: If you want to stay on budget, you can find unique and well-priced home furnishings and decor on online marketplaces like Facebook Marketplace or Craiglist.

Buying a strata property without reviewing the documentation

Many first-time homebuyers in BC are not aware of the different types of documentation they should review before buying a strata property. Unexpected costs such as elevator repairs or roof replacements can be a large financial burden if the strata does not have enough money in their contingency fund.

Tip: Review the Strata’s meeting minutes with your realtor to look for the contingency funds as well as a list of upcoming repairs that are planned to be completed in the near future.

Shopping for a home without a pre-approval 

Shopping for your first home can be exciting, but it’s important to get a pre-approval from a Mortgage Specialist before you start your search. Your Mortgage Specialist will review your income, down payment, credit and other debt payments to help determine what mortgage amount you could be approved for.

Tip: Your pre-approval is typically valid for 90-days and usually includes an interest rate guarantee so that you can shop for your new home with confidence.

Get ready to buy your first home in BC!

Now that you know how to prepare for buying your first home, you’re ready to start the process! Your first step should be getting in touch with a dedicated Mortgage Specialist and locking in your pre-approval. 

Vancity offers efficient mortgage approvals and competitive rates for first-time homebuyers in BC. We return 30% of our net income to members and communities, assisting people with financial literacy, creating affordable housing, and building a global banking alliance.

Get in touch with one of our Mortgage Specialists today and get started on your home buying journey!