Acreage & Rural Property Mortgages in Alberta — The Complete Guide

Buying an acreage is not the same as buying a house in the city. The mortgage rules are different, the lender options are limited, and surprises can kill your deal.

Most lenders only value 10 acres plus the house and garage. Outbuildings? Usually excluded. Well and septic? Some lenders won't touch it. Agricultural zoning? Even fewer options. And the appraisal process works differently than anything you've seen in town.

This guide explains exactly how acreage and rural property financing works in Alberta — the rules, the pitfalls, and how to navigate them. I've been financing rural properties for over 25 years. This is what I wish every buyer knew before they wrote an offer.

What's on This Page

1. The 10-Acre Rule — And How to Get Around It
2. Down Payment Requirements by Property Type
3. Well & Septic — What Lenders Require
4. Zoning: Country Residential vs. Agricultural
5. Outbuildings, Shops & Barns
6. The Appraisal Gap Problem
7. CMHC Insurance on Acreages — Yes, It's Possible
8. Acreage Buyer's Document Checklist
9. 5 Mistakes Acreage Buyers Make
10. Frequently Asked Questions
11. Talk to Shawn Before You Write an Offer

The 10-Acre Rule:

Most mainstream lenders (A-lenders/banks) will only assign value to the first 10 acres, the house, and one attached or detached garage.

Everything else — the remaining acreage, the barn, the shop, the riding arena, the extra garage — is typically excluded from the lending value. This means you may need to cover the difference in additional down payment.

Example — The 10-Acre Rule in Action:

You're buying a 40-acre property for $900,000 with a house, garage, and shop.

The lender appraises: 10 acres + house + garage = $700,000 lending value.

The remaining 30 acres and the shop = $200,000 that the lender won't finance.

At 80% LTV, the lender will advance $560,000 (80% of $700,000).

Your required down payment: $340,000 (not the $180,000 you expected at 20% of the full price).

How I Get Around It:

I have access to lenders who value up to 40 acres and a few who go up to 160 acres. Some also include one outbuilding in the lending value.

Using these lenders, the same $900,000 property might appraise at $850,000+ lending value instead of $700,000 — dramatically reducing your required down payment.

This is exactly why acreage buyers need a broker. Your bank has one set of rules. I have 40+ lenders with different rules — and I know which one fits your property.

Key point: The minimum down payment is based on the lending value, not the purchase price. If the lender only values 10 acres but you're buying 40, you'll need enough down payment to cover both the minimum requirement AND the appraisal gap. I calculate this precisely before you commit to anything.

What Most Lenders Require:

Water Potability Test — A lab test confirming the well water is safe for human consumption. Must be dated within 60 days of closing. Tests for bacteria (E. coli, coliform) and sometimes chemical contaminants. Cost: approximately $100–$300.

Well Flow Rate — Some lenders want confirmation the well produces sufficient water flow. The Well Driller's Certificate (if available) will show this.

Septic Inspection — A professional inspection confirming the septic system is functioning properly and complies with provincial/municipal requirements. Cost: approximately $500–$1,000.

Title Insurance Alternative — Some lenders accept title insurance in lieu of septic/well reports. This can save time and money if the seller can't or won't provide the inspections. I'll advise which route makes sense for your situation.

Why This Matters to YOU (Not Just the Lender):

A new well can cost $8,000–$15,000 to drill.

A failed septic field replacement can cost $30,000–$100,000+.

Getting these inspected before closing protects you, not just the bank. I always recommend well and septic testing as a condition of purchase — even if the lender doesn't strictly require it.

The hobby farm grey zone: You want a 40-acre property with a few horses and some hay production — but you're not a commercial farmer. Is it residential or agricultural? This distinction matters enormously for lending. Lenders don't want to foreclose on a farm. If there's any income from agricultural activity, many residential lenders will walk away. I know how to position these files properly and which lenders are comfortable with the grey zone.

How Lenders Handle Outbuildings:

• Most A-lenders: Value the house + one garage only. All outbuildings excluded from lending value.
• Some lenders: Will include one detached garage OR one outbuilding (e.g., a shop) — but not both.
• Very few lenders: Will include the full value of the home, garage, and one additional outbuilding.
• The impact: Excluded outbuildings create a gap between the purchase price and the lending value. You cover that gap with additional down payment.

Why Acreage Appraisals Often Come in Low:

• Comparable sales are scarce and geographically spread out
• Appraisers may not understand unique property features (equestrian facilities, custom homes, water features)
• Land value per acre drops significantly after the first few acres — an appraiser's formula may undervalue large parcels
• Outbuildings may be excluded entirely from the appraisal value
• Urban-focused appraisers assigned to rural properties don't always grasp the market

How I Minimize Appraisal Gaps:

• I work with appraisers who specialize in rural Alberta properties and understand acreage valuations
• I choose lenders whose appraisal guidelines are most favourable for the type of property you're buying
• For CMHC-insured purchases, the appraisal may be waived or covered at no cost to you
• If an appraisal comes in low, I know how to appeal or reposition the file with an alternative lender

CMHC-Insured Acreage Mortgages — The Rules:

• Purchase price must be under $1,500,000
• The property must have a habitable dwelling (not raw land)
• Standard down payment minimums apply: 5% on first $500K, 10% on the remainder
• Full income verification and standard qualification required
• The lender's appraisal guidelines will determine how much acreage is included in the insured value

Why CMHC Insurance Can Be an Advantage for Acreage Buyers:

Lower down payment: Instead of 20%, you may only need 5–10%.

Better interest rates: Insured mortgages often qualify for lower rates because the lender's risk is reduced.

Appraisal may be waived or covered: On insured purchases, some lenders don't require an appraisal — or CMHC covers the cost.

The trade-off: You'll pay a CMHC insurance premium (2.4%–4.0% of the mortgage, added to the loan). But the interest rate savings and reduced down payment often make the math work in your favour.

Property-Specific Documents:

• ☐ Water potability certificate (within 60 days of closing)
• ☐ Well Driller's Certificate (flow rate, depth)
• ☐ Septic inspection and compliance report
• ☐ Real Property Report (RPR) or land survey
• ☐ Municipal compliance letter (confirming the property meets local bylaws)
• ☐ Confirmation of zoning (country residential vs. agricultural)
• ☐ Property tax information
• ☐ Road access confirmation (public vs. private, year-round maintenance)

Standard Mortgage Documents (You Provide):

• ☐ Government-issued photo ID
• ☐ Most recent T1 General tax return + Notice of Assessment
• ☐ Recent pay stubs or T4s (employed) — or 2 years of business financials (self-employed)
• ☐ Confirmation of down payment source (bank statements, RRSP, gift letter)
• ☐ List of current debts (credit cards, car loans, etc.)
• ☐ Purchase contract (once an offer is accepted)

1. Not getting pre-approved BEFORE looking. In rural Alberta, properties move fast and each one has different financing characteristics. Get pre-approved first so you know your budget, then we can quickly assess whether a specific property is financeable. Pre-approval guide →

2. Assuming your bank handles acreages the same as city homes. Many bank mortgage advisors don't deal with rural properties regularly. They may not know their own institution's acreage limits until your file is already in underwriting — causing delays, conditions you didn't expect, or outright declines. A broker who specializes in rural properties prevents this.

3. Skipping well and septic inspections to save money. A $500 septic inspection could save you from a $60,000–$100,000 septic field replacement three months after closing. A $200 water test could prevent discovering your well produces contaminated water after you've moved in. These are not optional — they're essential due diligence.

4. Not budgeting for the appraisal gap. If you're buying a 40-acre property and the lender only values 10, you need extra cash. I calculate this in advance so you're never blindsided at the lawyer's office.

5. Writing an offer without talking to a broker first. Every rural property is different. A 15-minute call with me before you write your offer can tell you: what the likely lending value is, how much down payment you'll need, whether well/septic reports are required, and which lender conditions to expect. This prevents deals from falling apart.

Q: Are acreage mortgage rates higher than city home rates?

A: Not necessarily. If the property qualifies with an A-lender (under 10 acres, on services or with acceptable well/septic, country residential zoning), rates are essentially the same as urban. Larger or more complex properties that require alternative lenders may have slightly higher rates — but still far better than private lending.

Q: Can I buy raw land (no house) with a mortgage?

A: Land-only mortgages are very limited. Most lenders require a habitable dwelling. For raw land, expect to need 25–50% down and limited lender choices. If you plan to build, a construction mortgage may be a better route — you finance the land purchase and the build together.

Q: What if I plan to have a small farm operation?

A: If the property generates farm income, most residential lenders won't participate. The property needs to be financed as your primary residence with agricultural activity being incidental (hobby level). If you need to finance an active farm operation, agricultural lenders like Farm Credit Canada (FCC) are a different route entirely — different products, different rules.

Q: I'm self-employed and want to buy an acreage. Is it possible?

A: Yes — but self-employed + rural property = two challenges that many single lenders can't handle. I have access to lenders who do both: stated income programs for self-employed borrowers AND flexible acreage lending guidelines. See the self-employed guide →

Q: How much does it cost to use a broker for an acreage mortgage?

A: $0. My service is free. The lender pays my fee. This is true for A-lender and most B-lender placements. If your file requires a private lender (rare), there may be a broker fee — but I'll disclose that upfront before proceeding.

Q: Can I refinance an acreage I already own?

A: Yes — up to 80% of the lending value. This is a great way to access equity for renovations, debt consolidation, or other purposes. Same rules apply regarding acreage valuation and lender selection. Debt consolidation guide →

Q: What about building a new home on vacant acreage?

A: Construction mortgages for acreages are possible but more complex. You'll typically need 25%+ down, a fixed-price builder contract (or a draw mortgage if self-building), and the land must have services or clear plans for well, septic, and power. Builder draw mortgages release funds in stages as construction progresses. Self-build draw mortgages are more restricted — fewer lenders and more cash needed upfront. Call me early in the planning process.

Acreage Mortgages Done Right — By Someone Who Lives It

I live in rural southern Alberta and finance acreages across the province. Free assessment, no obligation.

Call/Text: 403-703-6847

Email: ShawnSelanders@gmail.com

Office: 614 High View Park NW, High River, AB T1V 1E5

Hours: Monday to Friday: 9:00 – 7:00  |  Saturday & Sunday: 12:00 – 5:00

Financing rural properties across Alberta, including:

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Explore My Mortgage Guides

• First-Time Home Buyer Guide Alberta
• Mortgage Pre-Approval — How It Works
• Self-Employed Mortgage Guide
• Debt Consolidation Mortgage Guide
• Mortgage Renewal Guide
• Reverse Mortgages in Alberta
• Foothills County Mortgage Broker

Shawn Selanders — RECA-licensed mortgage broker

Your Local Mortgage Professionals — Independent Mortgage Professional

Serving Foothills County, Calgary, Okotoks, High River, Diamond Valley, and all of Alberta since 1999

This page is for informational purposes only and does not constitute financial advice. Mortgage approval is subject to lender criteria and conditions. Rural property financing may require additional documentation including water potability tests, septic inspections, and specialized appraisals. Down payment requirements vary by property type, acreage size, zoning, and lender guidelines. Market data is approximate and subject to change. O.A.C. E.&O.E.