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Financing | January 4th, 2025

First-Time Home Buyers Tips If You’re Buying In Alberta

For many young people, the dream of homeownership often feels like a distant fantasy. Balancing the weight of student loans, escalating rent, childcare expenses, and the looming necessity of retirement savings, it’s no wonder that purchasing a home seems out of reach.

Adding to the challenge, many first-time buyers hear comparisons to past home prices that no longer reflect today’s reality. In Alberta, for example, the average home price in 1985 was approximately $80,183. Fast forward to December 2024, and that figure has risen to around $493,828. This stark contrast underscores the financial challenges faced by today’s first-time buyers.

Embarking on the journey to homeownership is undeniably exhilarating, yet it demands careful financial planning. For first-time buyers in Alberta, a thorough understanding of the process is crucial to sidestep costly errors and capitalize on available incentives. Equipping yourself with the right knowledge ensures that this monumental purchase aligns with both your current needs and future aspirations.

1. Start with a Solid Financial Plan

Before you start house hunting, make sure your finances are in order. Lenders will assess your credit score, income, and existing debt to determine your mortgage eligibility. One major mistake first-time buyers make is taking on additional debt before securing a mortgage. Avoid large purchases, like a new car or furniture, until after you’ve closed on your home.​

First Time Home Buyers in Alberta Down Payment & Incentives

In Alberta, saving for a down payment is one of the biggest challenges for first-time buyers. Typically, you need at least 5% of the home’s purchase price for a down payment. However, there are programs to help:

  • Home Buyers’ Plan (HBP): Withdraw up to $60,000 tax-free from your RRSP for a home purchase, with a 15-year repayment period.
  • First-Time Home Buyers’ Tax Credit: A $10,000 credit that results in a tax rebate of up to $1,500.
  • GST/HST New Housing Rebate: Allows buyers of newly built homes to reclaim part of the GST paid. Learn more.
  • First Home Savings Account (FHSA): A tax-advantaged account where buyers can contribute up to $8,000 annually (up to $40,000 total) to save for a down payment​

What About the First-Time Home Buyer Incentive in Alberta?

Many people ask about the “First-Time Home Buyer Incentive” or the so-called “Alberta First-Time Home Buyer Grant,” but it’s important to clarify that no such provincial program ever existed. The program people are referring to was actually a federal initiative that ended on March 31, 2024. This program offered a shared-equity mortgage with the Government of Canada, providing 5% or 10% of the home’s purchase price as a down payment. In return, homebuyers would repay the incentive based on the home’s market value when sold or after 25 years, whichever came first.

While this program is no longer available, there are still many options for first-time buyers to take advantage of. Be sure to check out the preceding section for more details.

2. Understand Your Mortgage Options

Choosing the right mortgage is crucial. Fixed-rate and variable-rate mortgages each have pros and cons. A fixed-rate mortgage offers stability, while a variable-rate may provide savings if interest rates decrease. Be sure to:

  • Get pre-approved before shopping for a home.
  • Compare mortgage rates from different lenders.
  • Factor in property taxes, insurance, and closing costs​

Use the Mortgage Affordability Calculator to determine how much you could borrow: How much can I afford?

Helpful Tip: Can You Really Afford That Mortgage? Here’s What to Know

Just because a lender says you qualify for a big mortgage doesn’t mean you should take it. Many first-time homebuyers make the mistake of stretching their budget to the max, only to find themselves stressed about making payments each month. The key to avoiding this is to focus on what you can comfortably afford rather than the maximum amount a lender offers.

Start by looking at your Gross Debt Service (GDS) Ratio, which is the percentage of your income that goes toward housing costs like your mortgage, property taxes, and heating. While lenders might approve you with a GDS of up to 39%, aiming for closer to 30%–32% is smarter if you want to keep some breathing room in your budget. Similarly, the Total Debt Service (TDS) Ratio includes all your debts, not just housing costs. Keeping your TDS below 40% is a good way to ensure you’re not financially stretched too thin.

Beyond those ratios, it’s wise to apply the “4 times your income” rule: try not to take a mortgage that’s more than four times your household income. For example, if you earn $80,000 a year, keeping your mortgage at $320,000 or less can help you avoid becoming “house poor.” The problem is that many homes in Alberta are well above this range. That’s where a Jandel modular homes, can be a game-changer. With prices starting under $200,000 (excluding land), they offer an affordable way to own a home that has the space and flexibility a growing family needs—without blowing your budget.

Owning a Jandel modular home means you can have a spacious three-bedroom house with a backyard for the same or even less than you’d spend on a cramped condo downtown. And because modular homes often come with energy-efficient designs and lower maintenance costs, your monthly expenses stay manageable. This balance of affordability and quality makes modular homes a smart investment for young families who want to build equity without sacrificing their entire paycheck.

The bottom line? Buying a home is about more than just qualifying for a mortgage—it’s about making sure you can actually afford to live comfortably once you have one. By sticking to realistic budget limits and considering affordable options like our modular homes, you can make homeownership a reality without the stress of living paycheck to paycheck.

3. Consider Hidden Costs & Ongoing Expenses

Many first-time home buyers focus only on the purchase price, but homeownership comes with additional costs. Some often-overlooked expenses include:

Property taxes: varies by municipality in Alberta

Home insurance: this may be required by lenders

Maintenance & repairs: budget at least 1% of your home’s value annually

Utilities: heating costs can be higher in Alberta’s winters

4. Avoid Common First-Time Buyer Mistakes

Many first-time home buyers in Alberta make the same financial missteps. Here are some to watch out for:

  • Skipping a home inspection: Don’t assume a home is in perfect condition. A professional inspection can save you thousands in unexpected repairs.
  • Overextending your budget: Just because you qualify for a high mortgage amount doesn’t mean you should max out your budget. Leave room for future expenses.
  • Ignoring resale value: Even if this is your “forever home,” life changes. Consider factors like location, school districts, and future resale potential​

5. Take Advantage of Alberta-Specific Programs

Alberta offers various homeownership support programs to help first-time buyers:

  • First-Time Home Buyers’ Tax Credit (HBTC): A federal tax credit to offset closing costs.
  • GST New Housing Rebate: If you’re buying a new or substantially renovated home, you may qualify for a partial rebate on the GST paid​

Why Modular Is The Best Investment for Young Families

For first-time homebuyers in Alberta, particularly those with young families or pets, finding an affordable home that offers ample space can be challenging. While apartments may seem like the only budget-friendly option, they often lack the room needed for a growing family or have restrictions on pets. Modular homes, such as those offered by Jandel Homes, present an excellent alternative.

These homes provide the opportunity to own a spacious two or three-bedroom residence complete with a backyard. This setup not only accommodates children and pets but also offers the comfort and flexibility essential for a family’s growth. Choosing a modular home allows first-time buyers to invest in a property that meets their current needs and anticipates future ones, all without compromising on quality or affordability.

Looking for your first home in the Edmonton area? Consider our Meadows of Morinville community, where you can get into a home for under $300,000.

Becoming a homeowner is an exciting journey, but preparation is key. By understanding your mortgage options, budgeting wisely, and taking advantage of available incentives, you can set yourself up for success as a first-time home buyer in Alberta.

If you’re ready to take the next step, Jandel Homes can help you find the perfect home. Contact us today to explore our move-in-ready and customizable homes across Alberta!

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