First-Time Home Buyers
How Much Money Do I Need to Buy a Home?
Buying a home involves more than the down payment. Here are the other costs worth planning for before you make an offer.
Here's the Quick Answer
More than just your down payment.
Your down payment will usually be the largest amount you need, but it is not the only cost involved in buying a home.
You may also need money for legal or notary fees, property transfer tax where applicable, adjustments, an inspection, moving expenses, and other costs connected with your particular purchase.
Planning for these expenses before you begin shopping can help you establish a realistic budget and avoid unwelcome surprises at closing.
Why This Matters
Many buyers spend months—or even years—saving for a down payment, only to discover that there are additional costs involved in completing a home purchase.
Understanding the full picture before you begin house hunting can help you decide what you can comfortably spend, protect the savings you will need after moving in, and make an offer with greater confidence.
Start With Your Down Payment
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 your 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 that mortgage default insurance is required.
The amount you choose to put down may affect the size of your mortgage, your monthly payment, whether mortgage default insurance is required, and how much money remains available 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 enough room for closing costs, moving expenses, immediate home needs, and unexpected costs after you receive the keys.
What Other Costs Should You Plan For?
The exact costs will depend on the home, the location, and the details of your purchase. These are some of the most common expenses to consider.
Legal or Notary Fees
A lawyer or notary completes the legal transfer of the property, prepares the mortgage documents, and handles the movement of funds.
Property Transfer Tax
BC property transfer tax may be payable when ownership changes. Some buyers may qualify for a full or partial exemption.
Home Inspection
An inspection can help you better understand the condition of the home before completing the purchase.
Appraisal
A lender may require an appraisal to confirm the property's value. Whether the buyer pays for it depends on the lender and the application.
Closing Adjustments
You may need to reimburse the seller for prepaid property taxes, utilities, strata fees, or other expenses that extend beyond the completion date.
Moving and Setup Costs
Moving, utility connections, insurance, furnishings, repairs, and immediate maintenance can all require additional funds.
Property Transfer Tax in British Columbia
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 several requirements, including the buyer, the property, the purchase price, and how the home will be occupied.
Because the rules and thresholds can change, property transfer tax should be calculated for your particular purchase rather than estimated from an older example found online.
Let’s Use an Example
The following example shows why the amount needed to purchase a home is greater than the down payment alone.
Example
Planning for a $650,000 Home
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 the 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 personal plans.
Don’t Use Every Dollar for the Purchase
Reaching your down-payment target is exciting, but getting 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?”
Common Questions
Do I need my down payment and closing costs at the same time?
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.
Can closing costs be added to my mortgage?
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.
Do first-time home buyers pay property transfer tax in BC?
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.
Can my down payment be a gift?
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.
Can I borrow my down payment?
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.
How much should I keep after buying the home?
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
Estimate the costs beyond your down payment.
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.
Open Closing Costs CalculatorDown Payment Calculator
See how much down payment you may need.
Enter a potential purchase price to see how the minimum down payment may be calculated and compare it with a larger down payment.
Open Down Payment CalculatorWhat to Explore Next
Continue Exploring
Here are a few related answers, guides, and tools that may help you take the next step.
Mortgage Minute
Do You Really Need 20% Down?
Understand minimum down-payment requirements and where the 20% rule comes from.
Mortgage Minute
What Is Mortgage Default Insurance?
Understand why mortgage default insurance exists, when it is required, and what it actually covers.
Mortgage Guide
First-Time Home Buyers
Follow the complete home-buying journey from early planning through financing, making an offer, and receiving the keys.
Personal Guidance
Planning a Home Purchase?
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.
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