Who doesn’t want to live in the country? You can enjoy clean, fresh air and access to farmer’s markets. Wide open spaces provide you with plenty of room to stretch your legs.
Getting a mortgage for an Alberta acreage can help you realize your dream of living in the country. Home financing for acreages involves some unique characteristics due to the country setting. Discover what percentage down payment might be required for county living in Alberta.
Refreshing Alberta Country Living
Fresh air, birds chirping happily, rabbits twitching their noses, an occasional deer eating from the budding trees – how can you beat country living in Alberta? You can’t. Rural Alberta is a great place to four-wheel with your friends or to raise your children.
When you own an acreage property in Leduc, you can plant a garden, build a fence or do whatever you please. You may even feel comfortable leaving your door unlocked at your acreage.
Acreage living is slower and more enjoyable. Find the right Edmonton mortgage broker to answer all of your questions concerning mortgages for Alberta acreages.
Living in the Country
People in the rural Alberta tend to be more self-sufficient and must handle property maintenance issues themselves. When you are ready to purchase a country home, you might need to provide more paperwork proving that your home is safe for human occupation.
Although there are many country factors to consider, we broke the list down to the top four. You must make sure that you satisfy these four requirements to qualify for a country home loan:
- Zoning
- Acreage
- Water & Septic
- Outbuildings
Advantage Mortgage has access to multiple mortgage brokers which can offer different loan qualification terms and conditions. We will try to give you the general industry standards.
Zoning
Country cottages are classified as residential loans. Farms (agriculture) are classified as business loans. To qualify for residential loans, your property should be zoned as “Agriculture Residential,” “Country Residential” or “Residential.” Some brokers will finance properties in “Mixed Use” zones.
Acreage
Edmonton mortgage lenders will finance 5 to 10 acres without blinking. What if you want a larger acreage loan than the broker is willing to finance? Some brokers will offer two loans – one for residential property up to 10 acres and another for the land above the 10 acres.
Types of Acreage Homes You Can Build in Alberta
Why not build your own country home? Country builds are a sub-category of financing that involve two expenses – paying the builders and buying the land.
Your home must be permanently fixed to the land – modular and pre-manufactured are not financed by some lenders. At Advantage Mortgage, these special circumstances are our specialty.
Water Well & Septic Tank
Most country homes are in remote areas, which are not connected to municipal water and septic systems. You will need to provide these yourselves if the property does not have them already.
Acceptable water sources are wells, cisterns or municipal. Acceptable sewage systems include holding tanks, sewage fields, septic tanks or possibly lagoons. You might also need to have them tested by the local municipality and provide the following documents as part of your acreages loan qualification: Water Potability Certificate, Septic Certificate or Well Drillers Certificate. The Water Potability Certificate must have been issued within the last 60 days.
Outbuildings
Outbuildings are barns, stables, shops, animal pens, quonsets and sheds. General finance industry practice is to finance your land, home and one garage. Usually, outbuildings are not financed.
But, I want a hobby farm.
Of course, some people want to have their own hobby farm. If you want a hobby farm, then you must tread lightly and not cross the line of being considered an active commercial enterprise.
You must pay out-of-pocket for outbuildings. Traditional banks might not handle hobby farms, alternative lenders might offer better financing terms for country estates.
Acreage Down Payment
The country mortgage qualification process uses the same credit rating, income requirements and debt servicing ratios as urban loans. You cannot use farming income – selling livestock or produce – to qualify because these are business loan activities. If you have the best credit history, income and property characteristics, the minimum Canadian acreage down payment is a mere 5%.
Why would Edmonton mortgage brokers adjust my down payment up or down? They are looking at risk. While many factors go into a broker’s assessment of your financing, here are the five key ones that might impact your down payment:
- Usage
- Acreage
- Home Type
- Property Value
- Urban Proximity
Usage
Some brokers might increase your down payment if there are any questions as to land usage. We, at Advantage Mortgage, prefer these more specialized loan categories.
Acreage
Basically, there are three acreage categories: under 10, 10 to 160 and over 160 acres. More acres might lead to a higher down payment requirement.
Home Type
Usually, the home type is not a problem unless it is modular, manufactured or mobile. Country home financing requires the house to be permanently affixed to the land.
Property Value
Each broker has a different amount that he is willing to finance. For some, a larger down payment might be required for over $1 million.
Urban Proximity
Properties that are further from major cities might have higher down payments. Some lenders use a “sliding scale” for properties gauging distance from major population centres.
Rural Cottage Checklist
So, after all of that information, you might need a refresher of the most important factors for purchasing your dream country home. These are the four primary factors to consider when looking at country home financing:
1. Zoning is “Country Residential.”
2. Ten Acres Financed
3. Water & Septic Systems Pass Inspections
4. Out-of-Pocket Outbuildings Purchase
Some banks might not openly admit that they don’t like financing acreages in Alberta. We, at Advantage Mortgage, specialize in finding solutions for these types of loans.
Country living in Alberta is within reach. We don’t offer one-size-fits-all loans because you are one-of-a-kind.
We’re excited to help you with home financing for acreages. Contact an Edmonton Mortgage Broker at Advantage Mortgage today to discuss your needs and harness the power of multiple mortgage lenders to increase your qualification budget and overall chances of approval.
Can’t you smell that fresh country air, already?