Buying Your First Home Can Be Very Exciting!
.... but it can also feel overwhelming. There are so many questions:
- Where do you start?
- How much can you afford?
- What programs are available to help you as a first-time buyer?
This guide is here to make the process easier to understand, breaking it down step by step.
Whether you're wondering if you qualify as a first-time buyer, need help navigating the mortgage process, or want to know what types of homes you can afford in Mission, BC—this guide has all the answers.
What Makes You a First-Time Buyer?
In British Columbia, you’re considered a first-time buyer if:
- You’ve never owned a home anywhere in the world.
- You haven’t owned a home in the last 4 years.
- You’re going through a separation or divorce and selling your previous home.
Benefits for First-Time Buyers in BC
Being a first-time buyer comes with some great perks!
Here are the key benefits you should know about:
1. Property Transfer Tax Exemption:
- Homes priced at $500,000 or less qualify for a full exemption.
- Homes priced between $500,000 and $525,000 may qualify for a partial exemption.
2. First-Time Home Buyers’ Tax Credit:
- A federal tax credit that can save you up to $1,500 in the year you buy your home.
3. RRSP Home Buyers’ Plan (HBP):
- Withdraw up to $35,000 from your RRSP tax-free for a down payment. Couples can withdraw up to $70,000 combined.
4. First-Time Home Buyer Incentive:
- A shared-equity program where the federal government offers 5% or 10% of the purchase price to help reduce your mortgage payments.
Understanding Mortgages
Getting pre-approved for a mortgage is one of the first steps in the home-buying process. It helps you understand what you can afford and shows sellers that you’re serious. Here’s what you need to know:
When purchasing a home, it's essential to understand mortgage amortization—the length of time over which you'll repay your mortgage in full. A longer amortization period results in lower monthly payments but increases the total interest paid over the life of the loan.
Recent Changes for First-Time Homebuyers
As of December 15, 2024, the Canadian government has implemented significant reforms to assist first-time homebuyers:
- 30-Year Amortization Periods: First-time buyers can now opt for a mortgage amortization period of up to 30 years, regardless of whether they're purchasing a new build or an existing property. This extension aims to reduce monthly mortgage payments, making homeownership more accessible.
- Increased Insured Mortgage Cap: The maximum property value eligible for an insured mortgage has been raised from $1 million to $1.5 million. This change allows buyers in higher-priced markets to benefit from lower down payment requirements.
Down Payment Requirements
With these updates, the minimum down payment structure is as follows:
- 5% of the purchase price for homes up to $500,000.
- 10% of the portion of the purchase price between $500,000 and up to $1.5 million.
- 20% of the purchase price for homes over $1.5 million. (Not eligible for insured mortgage)
Example Calculation
For a home priced at $600,000:
First $500,000: 5% of $500,000 = $25,000
Remaining $100,000: 10% of $100,000 = $10,000
Total Minimum Down Payment: $25,000 + $10,000 = $35,000
Considerations:
While a longer amortization period lowers monthly payments, it increases the total interest paid over time. It's crucial to assess your financial situation and long-term goals when deciding on the amortization period. Additionally, with the increased insured mortgage cap, more properties are now accessible with lower down payments, but it's essential to budget for mortgage insurance premiums and other related costs.Stress Test:
What Types of Homes Can You Buy in Mission, BC?
Mission, BC offers a variety of housing options to suit different budgets and lifestyles. Here are the most common types for first-time buyers:
- Condos and Apartments: A more affordable option for singles or couples looking for low maintenance living.
See Mission Condos - Townhomes: A great choice for families or those who want a bit more space.
See Mission Townhomes - Detached Homes: Ideal for buyers with a larger budget who want more privacy and room to grow.
See Mission Detatched Homes
Costs to Budget For
Costs to Budget For
- Closing Costs: These include legal fees, property taxes, and home inspections, typically 1.5%-4% of the purchase price.
- Mortgage Insurance: If your down payment is less than 20%, you’ll need to pay for mortgage default insurance.
- Monthly Costs: Property taxes, utilities, strata fees (if applicable), and home insurance.
FAQs for First-Time Buyers
Q: How much do I need for a $600,000 home?
A: You’ll need $35,000 for the down payment:5% of the first $500,000 ($25,000) and
10% of the remaining $100,000 ($10,000)
Q: What’s the first step in buying a home?
A: Start with a mortgage pre-approval. This helps you know your price range and shows sellers you’re a serious buyer.Learn more about mortgages here
Q: Are there programs to help first-time buyers?
A: Yes! Programs like the Property Transfer Tax Exemption, First-Time Home Buyers’ Tax Credit, and RRSP Home Buyers’ Plan are designed to help reduce your costs.
Ready to Start Your Journey?
Buying your first home can be both exciting and challenging, but you don’t have to do it alone.
As a Mission, BC real estate expert, I’ll guide you through every step and make the process as smooth as possible.
If you have any questions or are ready to start looking for your first home, feel free to reach out!
If you have any questions or are ready to start looking for your first home, feel free to reach out!
Call Irene Today!
Homelife Advantage Realty (CV) Ltd
Mission BC
