Last updated: May 16, 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.
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.
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.
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.
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.
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.
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.
Read more about the Alberta PEAK 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.
Read more about the Edmonton First Place Program
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.
Read more about the Attainable Homes Calgary Program
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:
Read more about the FTHBI
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.
Read more about The Home Buyers’ Plan
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.
Aside from exploring different programs and grants, here are a few other tips to help you on your homeownership journey.