First-Time Home Buyers
Buying a home involves more than the down payment. Here are the other costs worth planning for before you make an offer.
Two Separate Amounts
Both amounts need to be considered before you decide how much money is available for the purchase.
The portion of the purchase price paid from your available funds.
The additional expenses connected with completing the purchase and moving in.
Example
A buyer purchasing a $650,000 home with the minimum down payment might begin with the following planning estimate:
Down Payment
Minimum based on the purchase price
$40,000
Legal Fees and Disbursements
Planning estimate only
Approximately $2,000
Home Inspection
If the buyer chooses to have one
Approximately $700
Adjustments and Moving Costs
Depends on the purchase and move
Varies
Property Transfer Tax
Depends on eligibility for an exemption
Varies
The buyer should plan for the $40,000 down payment plus all applicable closing, moving, and setup costs.
These figures are examples rather than quotes. The actual amount will depend on the property, service providers, tax eligibility, closing adjustments, and the buyer's plans.
Planning Insight
Many buyers spend months or years saving for a down payment, only to discover that additional money is needed to complete the purchase.
Understanding the full picture before house hunting can help you establish a realistic budget, protect the savings you may need after moving in, and make an offer with a clearer picture of the costs involved.
The Starting Point
Your down payment is the portion of the purchase price that you pay from your own available funds. The remaining amount is generally financed through the mortgage.
Depending on the purchase price and your qualification, you may be able to buy with less than 20% down. A down payment below 20% will usually mean mortgage default insurance is required.
The amount you choose to put down may affect the size of your mortgage, monthly payment, insurance requirements, and how much money remains for the other costs of buying and owning the home.
Important
The largest possible down payment is not automatically the best choice. Your plan should also leave room for closing costs, moving expenses, immediate home needs, and unexpected expenses after you receive the keys.
Beyond the Down Payment
The exact costs depend on the home, location, and details of the purchase. These are some of the most common expenses to consider.
A lawyer or notary completes the legal transfer, prepares the mortgage documents, and handles the movement of funds.
See what happens before completion dayBC property transfer tax may be payable when ownership changes. Some buyers may qualify for a full or partial exemption.
An inspection can help you better understand the condition of the home before completing the purchase.
A lender may require an appraisal to confirm the property’s value. Whether the buyer pays depends on the lender and application.
You may need to reimburse the seller for prepaid property taxes, utilities, strata fees, or other expenses extending beyond completion.
Moving, utility connections, insurance, furnishings, repairs, and immediate maintenance can all require additional funds.
A Major BC Closing Cost
Property transfer tax is often one of the larger closing costs for a BC home purchase.
It is generally calculated using the fair market value of the property and is normally handled through your lawyer or notary when the purchase completes.
Some first-time home buyers may qualify for a full or partial exemption. Eligibility depends on the buyer, property, purchase price, and how the home will be occupied.
Because the rules and thresholds can change, property transfer tax should be calculated for the particular purchase rather than estimated from an older example.
After You Receive the Keys
Reaching your down-payment target is exciting, but receiving the keys is not the end of your home-buying expenses.
Even a well-maintained home can require immediate purchases or repairs. You may need to pay for moving, utility setup, insurance, window coverings, furniture, maintenance supplies, or something unexpected shortly after possession.
A comfortable home-buying plan considers not only whether you can complete the purchase, but also how your finances will feel once you are living in the home.
A Better Question
Instead of asking only, “Do I have enough to buy?” also ask, “How much would I like to have left after I move?”
Frequently Asked
Clear answers to some of the most common questions about this topic.
You should be prepared to show that you have enough money for both. Your lender will usually verify your down payment before approving the mortgage, while most closing costs are paid when the purchase completes.
Most closing costs are normally paid from your own funds rather than added to the mortgage. It is important to plan for them separately from your down payment.
Some first-time home buyers may qualify for a full or partial exemption, depending on the purchase price, the property, and their eligibility. The rules should be reviewed carefully before assuming that an exemption will apply.
Many lenders allow an immediate family member to provide some or all of the down payment as a non-repayable gift. The lender will usually require a signed gift letter and documents showing the funds entering your account.
Some mortgage programs may permit a borrowed down payment, provided the loan payment is included when you qualify. The available options depend on the lender, your credit, your income, and the rest of your application.
There is no single amount that works for everyone. Ideally, your purchase plan should leave room for moving costs, immediate home expenses, and an emergency fund rather than using every available dollar for the down payment.
Closing Costs Calculator
Use the Closing Costs Calculator to estimate property transfer tax and several of the other expenses that may be part of your BC home purchase.
What to Explore Next
Here are a few related answers, guides, and tools that may help you take the next step.
Mortgage Tool
Enter a potential purchase price to estimate the minimum down payment and compare it with a larger contribution.
Mortgage Minute
Understand minimum down-payment requirements and where the 20% rule comes from.
Mortgage Minute
Understand why mortgage default insurance exists, when it is required, and what it actually covers.
Mortgage Guide
See what happens after conditions are removed, including legal signing, closing funds, completion, possession, and getting the keys.
Personal Guidance
Buying a home involves more than simply saving a down payment. If you would like help planning your budget or understanding the costs involved, I would be happy to walk through it with you.
Need a Second Opinion?
I can help you work through the numbers and the next step.
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