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27 Feb

Down Payment 101: What You Need to Know in British Columbia

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Down Payment 101: What You Need to Know in British Columbia

By Jen Lowe – Mortgage Broker

Whether you’re a first-time homebuyer in Victoria, Vancouver, Kelowna, or anywhere across BC, one question I get asked way more than it should be is: “How much money do I actually need to buy a home?”

So let’s break this down clearly and honestly — no sugar-coating, no surprises.

You need to know the rules, where the funds can come from, and how your down payment affects your mortgage options, rates, and approval odds here in BC’s housing market.

1. The Basics: How Much Down Payment Do You Actually Need?

In Canada — including BC — the minimum down payment rules depend on the price of the home:

🏡 Purchase Price up to $500,000

✔ Minimum 5% down

🏡 Portion from $500,000 to $999,999

✔ Minimum 5% of the first $500,000
✔ 10% of the portion above $500,000

That means:

  • A $400,000 home → $20,000 minimum down

  • A $750,000 home → $25,000 + $25,000 = $50,000 minimum down

🏡 Homes $1 Million+

Most lenders will require a minimum 20% down if the purchase price hits $1M or more — meaning $200,000 down on a $1M home.

This is standard across the country and absolutely applies here in BC’s pricier markets too.

2. Where Can Your Down Payment Come From?

Not all money is treated equally by lenders.

💡 Acceptable Sources:

  • Personal savings

  • Gifts from family (with a proper gift letter)

  • Sale of another property

  • RRSPs via the Home Buyers’ Plan

  • Proceeds from investments or stocks

🚫 NOT acceptable:

  • Borrowed funds (a loan from someone that isn’t a gift)

  • Unverified cash with no paper trail

  • Unsecured lines of credit

Your down payment needs to be documentable. Trust me — lenders will ask for statements, transfers, and audit trails. So start organizing your funds early.

3. The Impact On Your Mortgage & Rates

🟡 Less than 20% Down?

If you put down less than 20%, your mortgage becomes high-ratio and requires mortgage default insurance.

That insurance protects the lender — but you pay for it. It adds to your total mortgage cost, but it also makes homeownership possible with less down.

With insurance you can still get great rates — but the total cost is higher because of the added premium.

🔵 20% or More Down?

This is ideal.

✔ You avoid mortgage default insurance.
✔ You unlock more lender options.
✔ You often get lower interest rates.

Lenders in BC look at down payment size and source as key risk factors when they quote you a rate.

4. First-Time Buyers — You May Have Extra Options

As a first-time homebuyer in BC you may qualify for:

🟢 Home Buyers’ Plan (HBP)

  • Use up to $35,000 from your RRSP

  • Each partner can use it — up to $70,000 total

🟢 First-Time Buyer Incentive

Federal program that reduces your monthly payments — but it also affects your equity share. It isn’t right for everyone, so talk it through.

🟢 Property Transfer Tax (PTT) Exemption

If qualifying as a first-time buyer, you may be exempt from paying this tax on your purchase — which can save you thousands right at closing.

5. Gifted Funds — What You Need to Know

If your down payment is coming from a family member:

✔ The gift has to be truly a gift
✔ A signed gift letter is mandatory
✔ They can’t expect repayment
✔ The funds must be transferred into your account

Lenders will ask for this documentation — and the more transparent you are up front, the smoother the approval.

6. Save Faster: Practical Tips That Work

Here’s what I tell my clients all the time:

🟡 Automate your savings

Set up pre-authorized transfers to a separate savings account.

🟡 Track your progress

Seeing how close you are motivates you more than you think.

🟡 Reduce debt first

Lower debt makes you look stronger to lenders, and it protects your approval odds.

🟡 Don’t tap retirement funds unless it makes sense

The Home Buyers’ Plan is great — but be cautious if you’re pulling from long-term retirement savings.

7. Why This Matters in BC’s Market

BC’s housing market moves fast. Inventory shifts, interest rates fluctuate, and buyers with prepared down payment funds win more often than those who scramble last minute.

Getting serious about your funds early isn’t optional — it’s a strategic advantage.

Bottom Line

Your down payment:
✔ Determines your mortgage type
✔ Affects your rate
✔ Influences lender options
✔ Can unlock savings programs

And in BC’s competitive market, being financially organized before you make an offer is one of the best decisions you’ll make in your home-buying journey.

Need Help Pulling It All Together?

I’m Jen Lowe, Mortgage Broker — and helping buyers understand down payments, build a strategy, and get confidently approved is what I do every day.

Let’s talk about:
✔ Your down payment goals
✔ What sources you can tap
✔ How to position your application for the strongest approval

No guesswork. No stress.

Just a plan that gets you closer to your BC home.