Big city living isn’t for everyone, some people long to look up at stars instead of city lights. Moving out of a metropolis to a rural area might be next on your bucket list. If so, here are three things we need to look at:

  1. 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.  "Out buildings" such as shops, barns, and Quonsets are almost always not included in the value of an appraisal.   
  2. 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.
  3. 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.)

Keep in mind that income generated from an acreage will not be included to help you qualify for the mortgage.  In fact, if a great deal of income is currently being generated from the current owner from such things as mineral rights, or leasing the fields to a farmer, this may raise a flag to lenders who may consider this more like a farm loan or business loan instead which is a completely different process.

Thanks for reading, I’m Al Nenshi, contact me any time with any questions! 




Contact Information

Photo of Stewart J. Lowe &  Associates Real Estate
Stewart J. Lowe & Associates
Real Estate Professionals Inc
202 5403 Crowchild Trail
Calgary AB T3B 4Z1
Direct: 403-850-0669
Fax: (403) 476-7608