Alberta first-time home buyer guide 2023

If you’re a first time home buyer in Alberta, there are ways to improve your affordability and prepare for a competitive market such as applying for provincial and federal incentive programs and working with a mortgage advisor to help you avoid common mistakes.

Who qualifies as a first-time buyer in Alberta?

It’s important to understand what being a first time home buyer in Alberta means, especially if you are looking into applying to any of the provincial assistance programs.

To qualify as a first-time home buyer in Alberta, you must have never owned or had an interest in a home anywhere in the world previously. Keep in mind that this qualification might vary depending on the program you are applying for.

What are the ways to prepare as a first time home buyer in Alberta?

Becoming a homeowner is not always easy but there are ways to prepare yourself so that you can be ready to buy a property when the time comes. It’s important to set realistic expectations by understanding the market you are going into, and know what financial areas that you need to improve or focus on by speaking to a mortgage advisor.

Housing supply and prices

Have realistic expectations when it comes to housing prices and supply, especially in the area that you are looking to buy in. According to the Alberta Real Estate Association’s April 2023 provincial statistics report, inventory levels in Alberta dropped over last year’s levels by nearly six percent representing the lowest inventory levels reported in April since 2007 and the total residential average price was $462,086. Highly priced houses will require larger mortgages to finance them as well as larger minimum down payments.

Down payment and finances

In Canada, buyers must provide at least a 5% down payment on a home if it costs less than $500,000. If the property is more than $500,000, you will be required to have a larger down payment. This is a good time to speak to your mortgage advisor and strategize on ways to strengthen your overall finances before applying for a mortgage. Mortgage advisors also have connections with different lenders and can find you a better rate than most banks.

Local real estate activity

Another key person to connect with is a reputable real estate agent for the area that you are interested in and let them know your goals and spending limits. They will look at recent sales activity and help you understand the market you want to get into and how competitive it is. They will help you feel prepared to buy your first home and explain what growth potential it has.

Are there first-time home buyer programs in Alberta?

Alberta PEAK Program

PEAK is a down payment assistance program designed to help new home buyers enter the market, retain their equity to move up, and to continue to recirculate the initial fund to help additional buyers purchase a home. PEAK housing units are priced at market value and recipients must be able to qualify for and hold a mortgage. Once you are approved for the program, PEAK will provide a second mortgage for either a partial or full down payment up to a maximum of 5% of the purchase price. Recipients are able to retain all of the equity in their home, minus their initial deposit, if they stay in the home for at least three years.

To qualify:

• Are pre-approved for a five-year fixed-rate mortgage equivalent to the price of the PEAK housing unit;
• Have a household income to a maximum of $80,000 per year for singles or couples with no dependant children living at home; or, $90,000 per year for singles or couples with dependent children living at home;
• Don’t have available resources for a 5% down payment;
• To secure a unit you must have $1,000 available for a down payment;
• Have assets equaling less than $30,000 per household (excluding primary vehicle, RESP, RRSP or pension); and
• Will keep the PEAK Housing unit as your sole permanent residence.

Read more about the Alberta PEAK Program

Edmonton First Place Program

The First Place Program teams with banks and builders to develop vacant surplus school building sites into attractive townhomes. The homes are market priced, with a 5 year deferral on the land portion of the mortgage, making them more accessible to first time home buyers. Homeowners that participate in this program will need to pay back 5-years worth of land costs after five years have passed. That’s because the program only defers land costs, not refund them or exempt them.

To qualify:

• Able to obtain pre-approved financing
  • recommended down payment of 5%, up to 25 year mortgage amortization
  • can be obtained with help of co-signer
• First-time homebuyers in Alberta
• The full-time occupants and residents of the condominium unit for the first 5 years
• $25,000 or less in personal net worth
• excluding a primary vehicle, RRSPs and mortgage down payment
• A Canadian citizen or have permanent resident status
• Employed with a combined household income of less than $117,000

Read more about the Edmonton First Place Program

Attainable Homes Calgary

When you buy a home through Attainable Homes Calgary, you only need to contribute $2,000 and the remainder is loaned to you to get you to 5%. There is no interest on the down payment loan. In exchange, the AHC program takes a portion of your home’s appreciation. This starts from 100% of the home’s appreciation in the first year of ownership, to 25% after five years of home ownership.

To qualify:

• Your combined household income is below $131,424
• You can qualify for a mortgage and provide $2,000 of your own money
• You complete our online education presentation
• You live in the home and it’s your only home
• Your assets are less than 20% of the home’s purchase price, up to a maximum of $50,000 (Your primary vehicle, RESP, RRSP, or pension don’t count against you)

Read more about the Attainable Homes Calgary Program

Are there federal programs for first time home buyers in Alberta?

The First-Time Home Buyer Incentive

If you are a Canadian first-time home buyer, you might be eligible to sign up for the First-Time Home Buyer Incentive (FTHBI) program, which provides financial assistance for first-time home buyers. The FTHBI is a shared equity program which allows first time home buyers to borrow up to 10% of the home value towards their down payment. This incentive will reduce the cost of borrowing by lowering your mortgage insurance and interest costs. The loan is interest-free, but if you’re approved, the government will own a portion of your home equity.

You can use our first-time home buyer calculator to calculate whether the FTHBI program will be beneficial to you.

In order to qualify, you must meet the government’s definition of a first-time home buyer:

• You plan on purchasing your first home that you will occupy as your primary residence
• You’ve recently experienced a breakdown of a marriage or common-law partnership. This applies even if you don’t meet the other first-time home buyer requirements
• You’re not living in a home that you or your current spouse or common-law partner owned in the previous 4-year period

Read more about the FTHBI

The Home Buyers’ Plan

The Home Buyers’ Plan allows you to withdraw up to $35,000 tax free from your RRSP, to help either purchase or build a home for yourself or a related person with a disability. Normally contributions to an RRSP are taxed at your marginal income rate and are subject to early withdrawal fees if taken out before you turn 60. If you are buying a home with a partner, they can also withdraw up to $35,000, allowing you a total of $70,000. In order to keep this RRSP withdrawal tax-free, you need to pay back the funds within a 15-year period.

To qualify:

• Be a first-time buyer.
• Be a resident of Canada from when you withdraw the funds until your home is bought or built.
• Intend to use the home as your principal residence within a year of buying or building it.

Read more about The Home Buyers’ Plan

Local homeownership programs and other grants

Here are a few other programs and grants that are available in Alberta. Although these aren’t specifically for first-time home buyers, you might be able to apply if you meet certain criterias.

• Banff Solar Energy Incentive. The City of Banff offers an energy rebate for residents who make use of solar in their home.
• Canmore Solar Energy Incentive. The City of Canmore also offers a rebate for residential solar energy systems.
• Edmonton Change Homes for Climate Solar Program. The City of Edmonton offers a rebate for residents who utilize a solar energy system in their home.
• The Greener Homes Grant is a federal grant for homeowners who put in specific renovations in their home including insulation, windows, doors, and heating systems. The grant is a rebate of up to $10,000 towards the cost of your renovations. There are more details on the government page but these grants are specifically incentivizing renovations that reduce energy use or increase your home’s efficiency, such as air sealing, insulation, replacing windows and doors or installing a heat pump.
• The GST/HST new housing rebate is a tax rebate available for buyers of new housing builds or substantially renovated homes from a builder. This rebate is only available if the home is your primary residence and the value of the home is less than $450,000. If you are eligible for this rebate you will receive back the federal portion of the tax paid for your home.

Are there any other Alberta first-time home buyer tips?

Aside from exploring different programs and grants, here are a few other tips to help you on your homeownership journey.

• Keep an eye on the market that you are looking at to see if competition is increasing or easing.
• Create a budget and stick to it so that you can keep your savings for a down payment on track.
• Have realistic expectations and don’t be discouraged if you can’t buy right away. You can try again when buying a home fits more comfortably into your budget.
• Follow a home buying guide to ensure that you don’t miss any important steps.
• Always get help from a real estate and mortgage professional. They can help you avoid common mistakes and make the process much more simple and hassle free.