So You Want to Build Your Own Home in Alberta? Here's What You Need to Know.

Written By Renee Huse

Building your own home—especially here in Alberta where wide open spaces meet opportunity—can be an incredibly rewarding experience. But it’s not as simple as buying a lot, hiring some trades, and hoping the bank funds the dream. If you’re a contractor (or just getting started as one), or even someone handy and ambitious enough to be your own general contractor, this guide is for you.

There’s a right way to do this—and a lot of ways to get stuck before the shovel hits the dirt.

Renee Huse, founder of Spire Mortgage Team in Calgary, Alberta, has worked with countless Alberta clients to finance custom homes the right way. Let’s walk through what it really takes to buy land, build a custom home, and get financing in Alberta.

Step 1: Position Yourself for Success

Before we talk money, land, or permits, let’s look at you.

Ask yourself:

  • Do you have a builder resume or prior construction experience?
  • Have you built before—either for clients or yourself?
  • Do you have trades lined up, or at least a network to lean on?
  • Is your financial house in order?
  • Can you qualify for new home warranty insurance?
  • Do you have net worth or fallback assets to weather a project delay?
  • Do you have a mentor, advisor, or pro in your corner?

If you’re not sure about some of these—don’t worry, we’re going to unpack them all. But this is your first checkpoint: positioning yourself for success.

Step 2: Buy the Land Strategically

✅ You’ll Need a Bigger Down Payment (and a Smart Cash Strategy)

Most lenders require 25%–35% down on a vacant lot. Land is higher risk—no structure to lend against, and if your project doesn’t happen, the lender is left with a resale headache.

✅ Land Loans Work Differently

  • Shorter terms (1–2 years)
  • Higher interest rates
  • More scrutiny on your exit strategy

Typically, the rate is prime + 2%, and amortization is often capped around 20 years. Once your construction mortgage is approved and the first draw is ready, you may be able to pay out the land loan with those funds. But if your build gets delayed, you could be sitting on sizable monthly payments in the meantime—so plan your timing carefully.

Some lenders won’t finance land unless you have building plans and timelines. Others might require you to cross-collateralize using another property you own.

Pro Tip: Look for serviced lots (utilities to the lot line). These are significantly easier to finance. Unserviced land isn’t impossible—but it’s a steep uphill battle. Expect fewer lenders, more conditions, and higher rates.

🔑 Positioning Yourself for Success

Smart builders line up capital before they go shopping. One of the best ways to do that is by setting up HELOCs (Home Equity Lines of Credit) on any properties you already own.

Why HELOCs Matter:

  • Fast, flexible access to cash
  • Ideal for land down payments, soft costs, and contingency funds
  • You only pay interest on what you use

If you don’t have HELOCs in place yet, it’s time to act. Apply before your cash is tied up in land. Reach out now—this one move could make or break your build.

Step 3: Secure a Construction Mortgage

Construction mortgages are designed to fund your custom home in draws (stages). You don’t get the full mortgage upfront. The lender releases funds as key milestones are met:

Draw Schedule:

  1. Foundation complete
  2. Framing done
  3. Lock-up stage
  4. Drywall complete
  5. Final occupancy

Each draw requires an inspection by a certified appraiser before funds are released. You’ll pay interest only on the amount drawn—not the full loan.

What It Takes to Qualify:

Document Purpose
Builder Resume Demonstrates experience managing builds and dealing with trades
New Home Warranty Certificate Mandatory in Alberta to ensure your build is protected and financeable
Detailed Budget + Draw Schedule Shows lenders how much the build costs and when funds will be needed
Signed Building Contract Confirms the builder's scope, costs, and responsibilities (fixed-price only)
Appraisal Based on Plans Determines the projected value of the finished home
Permits + Blueprints Verifies that plans meet municipal and building code requirements
Net Worth Statement Shows lenders you have fallback capacity if costs run over
Proof of Funds Confirms you have the down payment + contingency ready
Income Documentation Verifies you can carry the mortgage under normal qualifying guidelines

Step 4: Structure the Build and Your Contracts

Before we get into who should manage the build, let’s talk about how the build is contracted. This matters more than most people realize—especially to your mortgage lender.

📑 Fixed Price vs. Cost-Plus Contracts

Lenders want certainty—and that means fixed price contracts. A fixed price contract outlines exactly what the home will cost, what’s included, and who’s responsible for delivering it.

If your contract is "cost-plus" (meaning you pay the builder's cost of materials and labour plus a fee or percentage), lenders will almost always decline the mortgage. There’s simply too much risk and not enough predictability.

✅ If you're working with a builder, make sure your contract is structured as a fixed price agreement. It protects you, your lender, and helps move your file through underwriting with far less friction.

Cost-plus contracts can be useful in other scenarios (like major renovations or luxury custom builds with flexible budgets), but they don’t mix well with construction financing in Alberta.

Option 2: Become a Licensed Builder

Go through Alberta’s licensing and warranty approval process to act as your own builder.

Good for: Contractors with a proven track record or highly motivated owner-builders.

Expect: More paperwork, fewer lender options, tighter oversight, and a longer approval timeline.

Option 3: Use a B-Lender or Private Lender

This may work if you can’t get warranty insurance or don't qualify with A-lenders. But it comes with high rates, short terms, and a serious resale risk.

⚠️ Warning: Building without a valid New Home Warranty makes your house virtually unsellable to anyone using mortgage financing. It’s a red flag for most buyers and banks.

Good for: Short-term projects, strong equity holders, or those with an off-market buyer lined up.

Step 5: Avoid Common Pitfalls

❌ Underestimating Material and Labour Costs

Prices fluctuate monthly. Re-quote often and add 10–15% cushion for changes.

❌ Skipping the Contingency Fund

Always budget 10–15% extra. Overages are inevitable.

❌ Forgetting Draw Inspection Fees

Each draw costs $250–$500. Budget $1,500–$2,500 overall.

❌ Ignoring Soft Costs (Design, Permits, Legal)

Architects, engineers, and permits often need to be paid before mortgage funds are released.

❌ Expecting to DIY Everything

Managing a build is a full-time job. Don't wear every hat. Sub out what you can't own fully.

❌ Building Without a Warranty Plan

No warranty = no resale market. Protect your future exit strategy.

❌ Not Lining Up Capital in Advance

HELOCs, bridge financing, and access to cash are your lifeline between draws.

💬 Ready to talk through your plan with someone who's built before and funded hundreds of custom homes? Let’s connect.

Final Word: Build Smart. Learn as You Go.

Whether this is your dream home or your first step into development, the process is doable—if you structure it right.

Lean on experience. Use someone else’s 100 hours. And partner with a mortgage strategist who’s lived it from both sides of the table.

Renee Huse
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