BC First Time Home Buyers’ Program
Qualified purchasers are entitled to an exemption from the property transfer tax.
To qualify, you must not have owned a principal residence anywhere in the
world. If there are two or more purchasers to a property, each purchaser who is
eligible for the exemption may claim the exemption up to the percentage
interest that they are taking in the property.
In British Columbia the maximum house price for full exemption is $425,000
with a partial exemption up to $450,000.
For more information, phone toll free 1-800-663-7867, in Greater Vancouver
(604) 660-2421 and in Victoria (250) 387-0604.
GST New Housing Rebate
You may be able to claim a rebate for a portion of the GST you pay on the
purchase price or cost of building your home if you
- buy a new or substantially renovated home, mobile home, floating or
modular home from a builder or vendor
- buy a share in the capital stock of a co-operative housing corporation
- construct or substantially renovate your home (or hire someone to do so)
- had your home destroyed by fire and is rebuilt.
Contact the Canada Customs and Revenue Agency in your community for the
Completion Guide and Application Form. In most cases, your solicitor will take
care of this for you.
Home Buyers’ Plan (HBP)
The HBP is a program that allows you to withdraw up to $25,000 per person (or
$50,000 per couple) from your registered retirement savings plans (RRSPs) to
buy or build a qualifying home. Withdrawals that meet all conditions do not
have to be included in income and there is no withholding tax.
Conditions for participating in the HBP:
-You have entered into a written agreement to buy or build a qualifying
home. You intend to occupy the home as your principal residence.
- You or your spouse or common law partner have to be considered a firsttime
homebuyer i.e. have never owned or have not owned in the last 4
calendar years and 31 days before the withdrawal.
- Your HBP balance on January 1 of the year of the withdrawal has to be
zero i.e. nothing is outstanding from a previous purchase.
- Neither you, nor your spouse or common-law partner can own the home
more than 30 days before a withdrawal is made.
- You must be a resident of Canada.
- You must complete Form T1036.
- You have to receive all withdrawals in the same year.
-You have to buy or build the home before October 1 of the year after the
year of the withdrawal.
-When an RRSP contribution is made, you must wait 90 days before
withdrawing funds under the HBP or you may be denied the right to use
that contribution as an RRSP deduction for that year.
- The home can be for yourself or it can be for a related disabled person if it
is more accessible to that person than his or her current home, or it is better
suited to that person’s needs. You can acquire the home for the disabled
person, or you can provide the withdrawn funds to the disabled person to
acquire the home.
Repayment of the RRSP funds:
Repayment of the funds back to your RRSP must be made within a period of no
more than 15 years. Generally, in each year of your repayment period, you
have to repay 1/15 of the total amount you withdrew until the full amount is
repaid. Your repayment period starts the second year following the year in
which you made your withdrawals. If the required amount is not repaid in a
year, that year’s repayment amount will be added to your income and taxed
accordingly. Repayment can occur earlier if you wish.
Purchase Plus Improvements
This program is designed for people who wish to purchase a home that may
require some immediate upgrades . . . a new electrical service, a new roof,
central air, a new furnace, new siding, eaves, soffits, fascia, doors, windows, a
new kitchen, carpeting . . . or any other renovation that would increase the
value of the home.
The way it works is like this…Let’s assume that you are a first time buyer and
have 5% down payment. Before the mortgage financing is arranged, written
quotes are obtained from licensed contractors for the repairs and or the
improvements to be done to the home. When the application for mortgage
financing is made, the request is made for 95% of the purchase price PLUS
95% of the cost to complete the improvements. Note: The lender will “holdback”
on closing the “improvement” portion of the mortgage until the work has
been completed and inspected, normally within 30 to 60 days of closing. Once
the work has been completed, the lender will advance the balance of the funds
and the contractor can be paid.
What does this mean? Let us give you an example…
Purchase price: $100,000 X 95% = $ 95,000
Cost of improvements: $ 10,000 X 95% = $ 9,500
Total mortgage: $110,000 X 95% = $104,500
Therefore, an application is made for a mortgage in the amount of $104,500,
which represents 95% of the purchase price plus 95% of the improvements.
On closing this is what happens…The Mortgage advanced to complete the
purchase is $95,000 plus the original 5% from the purchaser’s down payment
($5,000) sufficient funds to complete the purchase of $100,000.
After closing the contractor completes the improvements (normally within 30 to
60 days after the closing) the lender advances the hold-back of $9,500, the
purchaser pays the additional 5% of the cost of the improvements ($500) and
the $10,000 owed to the contractor can be paid as per the original quote for the
Everyone’s a winner!
The purchaser is happy because they got $10,000 of improvements done to the
home with a cash outlay of only $500 (the balance was financed with their
The lender is happy because they now have a mortgage on an improved home.
Tips for Boosting Affordability
For first-time buyers affordability is a key issue as they look for a home of their own. Fortunately, there are some ways to increase mortgage affordability when buying in a competitive real estate market. Here are some tips to consider:
Revisit your current debts. When applying for a mortgage, a lender will look at your total debt service (TDS) ratio, or how much of your total income is going towards various types of debts, including car loans, credit cards, and other consumer loans. A Mortgage Consultant can advise on restructuring your current debt (for example, by increasing the amortization and lowering payments on your car loan), to ensure that your TDS ratio is acceptable to prospective lenders.
Increase the size of your down payment. A common way to come up with more cash for a down payment is to make use of the federal Home Buyers' Plan which allows qualifying purchasers to withdraw up to $20,000 each from their registered retirement savings plans (RRSPs) to buy or build a qualifying home without incurring tax penalties. A Mortgage Consultant has full details on the ins and outs of this program.
Look into a longer amortization. Mortgages with 30- or 40-year amortizations feature lower monthly payments than the same size mortgage with a traditional 25-year amortization. While longer amortizations do entail more in interest costs, there are additional strategies to further reduce the amortization and interest costs over the life of the mortgage, such as making lump sum payments down the road or increasing monthly payments (say, after receiving a salary increase).