Big City living in Calgary isn’t for everyone, some people like to look up at stars instead of the city lights. So moving out of a City or suburbs to a rural area might be next on your bucket list. If it is, here are a quick glance at what you need to look at, but we always advise to talk to a lender who understands rural sales, we can suggest a few.
How many acres are we talking? 5-10 acres is usually easier for a buyer because the mortgage generally qualifies parallel to a regular city home. The minimum down payment will normally be 5% of the purchase price if the property is under $1 Million. Over a million and a minimum down payment will be 20%. Remember that an appraisal will be required in most instances, and a lender will generally only give value for up to 10 acres, the house and garage. "Outbuildings" such as shops, barns, and Quonsets are almost always not included in the value of an appraisal.
Zoning of the property must comply if we are treating it as a regular residential mortgage vs. agricultural land. "Country Residential" is commonly the zoning for these types of properties. Rural is a larger acreage frequently 40, 80, or 160 acres (160 acres =1/4 section). Agricultural land is for farming use and cannot be financed by normal mortgage companies or banks.
Septic tanks and wells are typically found on acreages, which means a water potability test must be completed and a septic certificate is required from the municipality to confirm best practice. The lender needs to know that the water is safe. (Your realtor will help you with this.)
Potability reports are needed for all well water and flow rate, this will be required either upfront with the lender approval or at the lawyers before closing. We don’t suggest leaving it that late, it should be done before waiver day, before the conditions are lifted. No suprises!
- Note. The income generated from a Calgary area acreage will not be included to help you qualify for a mortgage. Remember, if a lot of the income is being generated by the owner from things like mineral rights, or leasing to a farmer, this may raise a red flag to lenders who could consider this more like a farm or business loan instead, which is a completely different process.
There are lots to consider before you purchase the land to build your Calgary Dream Home, so take your time and speak to your lender, make sure they have a rural loan expert on hand, then call us.