How much down payment you actually need
The minimum down payment in Canada is set federally, and it steps up with the purchase price instead of being one flat percentage. That surprises a lot of people — they hear "5% down" and assume it applies all the way up. It applies to the first $500,000 of the price, and a higher rate applies to the portion above that.
| Purchase price | Minimum down payment | Worked example |
|---|---|---|
| $500,000 or less | 5% of the price | $450,000 home → $22,500 |
| Over $500,000 and under $1,500,000 | 5% of the first $500,000, plus 10% of the portion above $500,000 | $800,000 home → $25,000 + $30,000 = $55,000 |
| $1,500,000 and above | 20% of the price | $1,600,000 home → $320,000 |
That last row is where the rules changed recently, and it matters in the Okanagan. Mortgage default insurance is available where the purchase price is below $1,500,000 — a ceiling raised from $1 million effective 15 December 2024, which opened up a meaningful band of Kelowna properties to buyers putting down less than 20%. Above it you're in conventional territory, where 20% down is the starting point.
Your down payment can come from your own savings, the sale of another property, or a gift from an immediate family member. Gifted funds are completely normal — lenders just want a signed gift letter and to see the money land in your account.
Mortgage default insurance, and when it applies
If your down payment is less than 20%, your mortgage is insured. The insurance protects the lender, and in exchange lenders are comfortable lending at a higher loan-to-value. It's the mechanism that makes 5% down possible at all. The premium is a one-time charge based on your loan-to-value ratio, and it can be added to the mortgage rather than paid up front:
| Loan-to-value | Premium (% of loan amount) |
|---|---|
| Up to 65% | 0.60% |
| 65.01% to 75% | 1.70% |
| 75.01% to 80% | 2.40% |
| 80.01% to 85% | 2.80% |
| 85.01% to 90% | 3.10% |
| 90.01% to 95% | 4.00% |
Those are the published CMHC premium rates. Good news for us: British Columbia is not one of the provinces that charges provincial sales tax on the premium — only Ontario, Quebec and Saskatchewan do. In BC the whole premium simply rolls into the loan.
One footnote: if any part of your down payment is borrowed rather than saved or gifted, CMHC publishes a higher premium of 4.50% in the 90.01–95% band. Worth knowing before you decide where the money comes from.
Thirty-year amortizations are available to you
Insured mortgages have historically been capped at 25 years. Since 15 December 2024, a 30-year amortization is available on insured mortgages for all first-time buyers and for anyone buying a newly built home. Stretching the amortization lowers the required monthly payment, which also eases the debt-service ratios used to qualify you. Extending past 25 years carries a small premium surcharge, and I'll show you both versions side by side so you can see exactly what the trade looks like.
The stress test, and what it does to your maximum
Every federally regulated lender qualifies you at a rate higher than the one you'll actually pay. The minimum qualifying rate is the greater of your contract rate plus 2%, or 5.25%. You make payments at your real rate; you're approved as though the rate were higher. It's a buffer built into the system.
Alongside that, lenders measure two ratios. Gross debt service is your housing costs — mortgage payment, property taxes, heat, and half of any strata fee — as a share of gross household income. Total debt service adds your other obligations: car payments, student loans, credit card minimums, support payments. On insured files these generally sit at 39% GDS and 44% TDS.
The practical takeaway is that your maximum is driven by three things you can influence: your income, your monthly obligations, and your amortization. Clearing a small balance before you apply, or choosing a 30-year amortization, can move your number more than people expect — and that's the first conversation I have with every buyer.
BC Property Transfer Tax
BC charges property transfer tax when a property changes hands. It's due at completion, in cash, and it isn't something you can roll into the mortgage — so it belongs in your budget from day one. The general rates are:
- 1% on the fair market value up to and including $200,000
- 2% on the portion above $200,000 up to and including $2,000,000
- 3% on the portion above $2,000,000
- A further 2% on residential value above $3,000,000
The first-time home buyers' exemption
This is one of the best things available to you in BC, and the thresholds were improved effective 1 April 2024. The exemption removes the tax on the first $500,000 of value — worth up to $8,000.
| Fair market value | What you pay |
|---|---|
| $500,000 or less | No property transfer tax at all |
| Over $500,000 up to $835,000 | Full $8,000 exemption applied against the tax |
| Over $835,000 up to $860,000 | Exemption phases down proportionally |
To claim it you need to be a Canadian citizen or permanent resident, and either have lived in BC for the 12 months immediately before registration or have filed at least two BC income tax returns in the previous six taxation years. You must never have owned a registered interest in a principal residence anywhere in the world, and never have claimed this exemption before. The property needs to be 0.5 hectares or less with residential improvements only, and you move in within 92 days and keep it as your principal residence through the first anniversary. Current amounts are published by the Province of BC.
The newly built home exemption
If you're buying new construction, there's a separate and more generous exemption that anyone can use — you don't have to be a first-time buyer. As of 1 April 2024, a newly built home with a fair market value of $1,100,000 or less is fully exempt, with a phase-out between $1,100,000 and $1,150,000. It covers new houses on vacant land, new condo units, manufactured homes on vacant land, and residential conversions — as long as the home has never been occupied since construction. Same occupancy rule: move in within 92 days and hold it as your principal residence for the balance of the first year.
If you're a first-time buyer looking at new construction, compare both — the newly built home exemption often produces the better result on its own.
FHSA and the Home Buyers' Plan, and how they stack
The First Home Savings Account gives you $8,000 of participation room per year to a lifetime limit of $40,000. Contributions are deductible against your income, growth is sheltered, and a qualifying withdrawal to buy your first home comes out tax-free. Unused room carries forward, capped at $8,000 of carry-forward in any one year. Opening one early — even with a small deposit — starts the clock and starts building room.
The Home Buyers' Plan lets you withdraw up to $60,000 from your RRSPs for a qualifying home, tax-free at the time of withdrawal. You then have 15 years to repay it back into your RRSP.
And here's the part people miss: the CRA confirms you can make an HBP withdrawal and a qualifying FHSA withdrawal for the same home, as long as you meet the conditions for each at the time of each withdrawal. For a couple who have both been contributing, that's a substantial down payment assembled entirely from tax-advantaged money.
Closing costs worth budgeting for
CMHC suggests budgeting 1.5% to 4% of the purchase price for closing costs. In BC that typically covers property transfer tax where it applies, legal fees and disbursements, title insurance, a home inspection, an appraisal where the lender orders one, adjustments for property taxes and strata fees the seller has prepaid, moving costs, and home insurance — which your lender will want in place before completion. Building this in from the start keeps the final two weeks calm.
Pre-qualification, pre-approval, and what each one gives you
A pre-qualification is a quick estimate based on numbers you tell me. It takes minutes and it's useful for orientation. A pre-approval goes further — I collect and review your income documents, pull credit, and submit to a lender, which secures a rate hold. Rate holds typically run 60 to 130 days depending on the lender.
What a pre-approval gives you is real: a rate protected while you shop, a verified budget, and standing as a serious buyer when you write an offer. What it doesn't do is finalize the mortgage — the lender still reviews the specific property you choose, and final approval comes once that property is assessed and your documentation is confirmed against the accepted offer. That's why I encourage buyers to keep a financing condition in their offer, and to talk to me before removing it.
What the process actually looks like
- A conversation. We go through your income, savings, timeline and monthly obligations.
- Documents. Typically ID, recent pay stubs, a letter of employment, T4s and Notices of Assessment, and statements showing your down payment and where it came from.
- Pre-approval. I place your file with a lender that fits it, and you get a rate hold and a clear budget.
- Shopping. Send me listings you're serious about — strata documents, age and property type all affect financing.
- Accepted offer. Send it to me the same day. I submit the live application with the property details.
- Lender approval. The lender confirms the property and issues a commitment, and we satisfy the conditions attached to it.
- Condition removal. Once financing is firm, you remove your subjects with confidence.
- Lawyer or notary. You sign roughly a week before completion and arrange your remaining funds.
- Completion and possession. Funds transfer, title registers, and you get the keys.
I work with 50+ lenders — the big banks, credit unions, and monoline lenders you can only reach through a broker — so your file goes to the one whose rules fit your situation, rather than you fitting yourself to one institution's rules. On a conventional mortgage, there's no cost to you for that.