Three programs, in plain words
First Home Savings Account (FHSA)
A registered account for saving toward a first home. What you put in reduces your taxable income, like an RRSP contribution, and what you take out to buy a qualifying first home is not taxed, like a TFSA. There is a limit per year and a lifetime limit, and the account has to be open before you can contribute, so opening it early matters even if the first deposit is small.
Home Buyers' Plan
Lets you take money out of your RRSP for a first home without paying tax on the withdrawal at the time. You repay it to your RRSP in instalments over a set number of years, starting a set time after the withdrawal; a missed instalment is added to your income for that year. The withdrawal limit changes from time to time, and we confirm the current one.
BC property transfer tax exemption
BC charges a tax when a property changes hands, paid on completion day. A first-time buyer can be exempt in full when the price is under the current threshold, and in part just above it. To qualify you must be a Canadian citizen or permanent resident, have lived in BC long enough, never have owned a home anywhere, and plan to live in the new home. Your lawyer or notary applies for it at completion; we make sure it is on their list.
The limits for all three change. Ask on the call for the current figures rather than relying on a number from last year.
How much you can borrow
Lenders use two ratios, and both are measured against your income before tax. The first takes the costs of the home itself: the mortgage payment, property tax, heating and, for a strata, half the monthly fee. The second adds every other debt payment you carry: a car loan, a student loan, credit cards, a line of credit. Each ratio has a ceiling, and the lower of the two sets your maximum.
The payment in those ratios is not the payment you will make. Under the federal stress test you must qualify at the higher of your contract rate plus 2% and 5.25%, so the lender knows you could still pay if rates were higher at renewal. It lowers what you can borrow; it is also why most people who qualify can afford what they bought.
Two things move the number more than anything else: the debts you carry into the application, and the size of the down payment. Clearing a car loan sometimes raises your ceiling more than another year of saving would. We run both before you start looking.
5% down and 20% down, compared
Less than twenty percent down means an insured mortgage, with rules of its own.
| Less than 20% down | 20% down or more | |
|---|---|---|
| Minimum down payment | 5% of the first part of the price and more on the portion above it; the lender confirms the figure for your price. | 20% of the price, from savings, a gift, or equity in a home you already own. |
| Default insurance | Required. A one-time premium on a sliding scale, usually added to the mortgage. It protects the lender, not you. | None. |
| Price limit | Insured mortgages have a maximum purchase price; ask for the current limit. | No limit from an insurer; each lender sets its own. |
| Amortization, the years the mortgage is paid off over | Capped by the insurer. A longer cap applies to some first-time buyers, which we confirm for you. | Up to the lender's maximum, which is often longer. |
| The home | You must live in it. A house with a suite that you live in still counts. | Can be your home or a rental. |
Each lender prices insured and uninsured mortgages differently, so the bigger down payment is not always the better answer. We show you both.
For the first call, nothing
The call needs only you and roughly what you earn; this list is for the pre-approval that follows.
- Two recent pay stubs
- A letter of employment on company letterhead: position, start date, salary
- Two years of T4s and notices of assessment, the CRA's summary of each year's return, showing nothing owing
- Two pieces of ID, front and back
- Ninety days of statements for every account the down payment sits in, with the source of any large deposit
- FHSA or RRSP statements if you are using either, and a signed gift letter if part of it is a gift
A timeline you can plan around
The slow parts are yours: gathering the documents and finding the home.
- 1
The call
Twenty minutes. What you earn, what you have saved, what you are hoping for. You leave with a realistic range and the document list.
- 2
Documents, then pre-approval
Most of the time goes on gathering. How long the lender takes to look depends on the lender and the time of year; we tell you the realistic timing upfront. You get a ceiling, and usually a rate held for a set period.
- 3
Looking
As long as it takes. If the rate hold runs out we refresh it. If your situation changes, tell us before you write an offer.
- 4
Offer, with a financing condition
Usually about a week between acceptance and subject removal, the date by which your conditions must be met. The lender sees the property; we clear its conditions with you.
- 5
Lawyer, then completion
The time from accepted offer to completion depends on the lender and the time of year; we tell you the realistic timing upfront. You sign shortly before completion and deliver the balance of the down payment and the closing costs.
- 6
After
A one-page look at where you stand each year, and a renewal heads-up twelve months before your term ends.
If you are not sure whether you count as a first-time buyer, or whether a program applies to you, the call is the place to ask. Book a 20-minute call →