First Time Buyer Friday #6 – What Does My Money Get Me?

In my continuing series, First-Time-Buyer Fridays, I answer a common question from a first-time buyer. If you have a question to submit, first-time-buyer or experienced investor, put one in the comments below, or fire me an e-mail at


Q. I want to spend about $400,000 on my first home – what can I buy for that kind of money?

A. Let’s break this down and see what $400,000 would cost first. To buy a $400,000 home, you’d need 5% down at a minimum, which is $20,000. The remaining $380,000 would need to be mortgaged. If you were to get a 5-year fixed rate at 4%, amortized over 35 years, your monthly payment would be about $1675. A two-income family should be able to afford that payment.

Keep in mind that you should think long-term. While interest rates today are at historic lows, you need to think about what happens in 5 years when it’s time to renew. No one knows where interest rates will be at that point, and you should build in a comfort zone by calculating the payment at a higher rate of interest. At 5%, the same mortgage estimated above would be $1905 – at 6%, $2150, and at 7%, $2401. The risks of this can be offset by choosing a shorter amortization period (25 or 30 years, instead of 35), which would allow you to pay off more of the principal before it’s time to renew, or you could make extra payments where your budget (and mortgage terms) allow.

So, now that we’ve established what $400,000 looks like on a monthly basis, let’s have a look at what that sum would buy you in today’s market.

In the Victoria core area (Victoria, Oak Bay, Saanich, View Royal and Esquimalt) there are 27 single family homes under $400,000 as of writing this post. Most are small, and old, but there are always a few gems in this price range. There are plenty of condos under $400,000 – 384 to be exact. In the higher end of the range, there are brand new suites at The Juliet, The Ovation, The Monaco, and other brand new high end developments in the core. At the lower end of the range, older buildings (which usually mean larger suites) offer stability and peace-of-mind for less than $250,000. There are 45 townhouses in Victoria and vicinity under $400,000 as of writing, with lots of variation in style, age and location.

Moving further out of the Victoria core area, you’ll get more bang for your buck. In Langford and Colwood as of this writing, there are 30 single family houses and 44 townhouses in Langford and Colwood for sale under $400,000 – including brand new homes in the Happy Valley area, and townhouses at the foot of Bear Mountain. $400,000 would get you nearly any condo, with 215 condos under $400,000 in Langford and Colwood to choose from. Only 21 are above $400,000, mostly on Bear Mountain, or in that new development on the waterfront in Colwood at Esquimalt Lagoon.

Further out west to Sooke is where many first-time buyers are choosing to go (here are 10 good reasons to move to Sooke.) The drive to Victoria is a little longer (but it’s nice!) and the town smaller, but that means that you get a lot more for your money. There are 49 houses for sale in Sooke under $400,000, including many brand new beautiful houses in new subdivisions. If you buy in Sooke, there is also the option of buying an older home to renovate to your liking. Older homes will most likely have a larger lot, too. There are not many condos or townhouses in Sooke, but more are being built all the time. Almost all of them are under $400,000, including the brand-new townhouses at The Pointe in Sun River Estates and waterfront condos along Kaltasin Road. As of writing, 29 condos and townhouses in Sooke under $400,000 are for sale.

I have found that first time buyers are often surprised by 1) How much they can afford, and 2) What that money will get them. There’s plenty of product out there, prices are declining, and with the Bank of Canada reporting that interest rates will remain low until at least the second half of 2010, there hasn’t been a better time to buy in a long time – if it’s right for your situation.

It may or may not make sense for you to buy right now. To get a clearer picture, or for more information about any of the homes mentioned in this post, give me a call at 250-885-0512, e-mail me at or fill in my contact form. Connect with me on Twitter at

Tim Ayres – Sooke Real Estate Professional

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Published by Tim Ayres

Tim Ayres is a Sooke and Victoria BC REALTOR®, with Royal LePage Coast Capital Realty. Tim is actively involved in helping clients buying and selling real estate in the southern Vancouver Island region. Tim is an active member of the Victoria Real Estate Board and served seven years (2009-2015) as a director, including serving as President in 2014.

4 thoughts on “First Time Buyer Friday #6 – What Does My Money Get Me?

  1. With the median family income in BC at around 67K or so, could you explain how dual income households should easily be able to carry a $380000 mortgage? Wasn’t the general rule of thumb 2-3 times income is your mortgage? That would put the income required somewhere between 126K and 190K; Though not outrageous, hardly ‘easy’.

    1. Hi Traciatim, thanks for the comment. According to this CMHC Affordability Calculator, an income of $67,000 would support the $380,000 mortgage I used as an example in this blog post. To be fair, I didn’t take into account things like property taxes or strata fees, but it was only a rough example.

      But as you’ve read in the post, I’ve cautioned first-time buyers to build in a comfort zone to compensate for interest rate fluctuations – and of course the mortgage lender will build in allowances for the property taxes and other expenses before determining a maximum mortgage amount.

      The point of the post was not to have first-time buyers go and take out a mortgage that stretches them to the limit, but merely to demonstrate that there are plenty of homes available below the $400,000 price point in Victoria and vicinity currently.

      Thanks again for leaving a comment – I’m always open to all viewpoints!

      Have a great weekend!

      Tim Ayres

  2. I’m not sure how you bent that calculator to spit out 380K with any sort of realistic scenario. Including 333 a month for property tax (4k per year), and 250 a month for heat, while bringing in 5583 per month with 20000 down pops out $208,978 for a mortgage (4.9%, 25 years). That’s almost half of what your are claiming is ‘easily’ affordable.

    If you put in 10000 a month as income, all else the same. It spits out exactly 380000.

    1. As I said in the post and in my reply to your first comment, My calculations didn’t include property taxes or other expenses. And, my calculations were based on 4% interest and 35 year amortization, so obviously your calculations are going to be different. I don’t think $4000 per year in property taxes nor $250 per month in heat is a realistic estimate here in Victoria – probably closer to $2000 per year and $90 per month for heat.

      Thanks again for your interest in my blog.

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