A method and apparatus of video coding using IntraBC (Intra Block Copy) mode are disclosed. The system derives a block vector pointing from the current block to a reference block within a reconstructed pixel area of the current picture. If the block vector is at the fractional-pel resolution, the block vector is restricted so that neighboring pixels at integer-pel locations around fractional-pel reference pixels of the reference block for generating the fractional-pel reference pixels of the reference block using an interpolation filter are all available within the reconstructed pixel area. In another embodiment, the unavailable reference pixels for interpolation to generate fractional-pel reference pixels are padded.