What Is a Mortgage? Mortgage Basics for First-Time Buyers in Alberta

Renee Huse, founder of Spire Mortgage Team in Alberta, is here to break it down clearly—no judgment, no jargon. We’ve helped hundreds of Albertans across Calgary, Edmonton, Red Deer, and beyond go from “Wait, what even is a mortgage?” to confident, informed homeowners.

What We’ll Cover

• What Is a Mortgage, Really?
• What Does a Mortgage Cover?
• How Do Mortgage Payments Work?
• What’s the Process of Getting a Mortgage in Alberta?
• Case Study: Emily’s First Place in Red Deer
• Glossary: Mortgage Terms You’ll Hear
• FAQs for First-Time Buyers in Alberta

What Is a Mortgage, Really?

A mortgage is a loan that helps you buy a home when you don’t have all the money upfront—which is most people. You make a down payment (usually at least 5%), and a lender gives you the rest of the money to complete the purchase.

You agree to pay that money back over time, with interest. The home acts as collateral, which means the lender can take it back if you stop making payments.

In Alberta, this is how almost everyone buys their first home—whether it’s a condo in Edmonton or a townhouse in Airdrie. A mortgage makes homeownership possible by spreading the cost over many years (usually 25 or 30).

There are different types of mortgages (fixed vs. variable, insured vs. conventional), but the basic idea stays the same: you borrow money to buy a home, and you pay it back in monthly installments.

What Does a Mortgage Cover?

Your mortgage pays for the part of the home’s price that you didn’t cover with your down payment. So if you’re buying a $450,000 home in Calgary and you put down 10% ($45,000), your mortgage will cover the other $405,000.

Depending on your situation, your mortgage may also include:

• Mortgage Insurance (if your down payment is less than 20%).
• Occasionally, small extras like legal fees or taxes.

Think of your mortgage as more than just a big number. It’s a tool that helps you get into a home while keeping monthly costs manageable. And the way it’s structured—like your rate, term, and insurance—can have a big impact on how much you end up paying over the years.

How Do Mortgage Payments Work?

Mortgage payments are usually made once a month. Each payment goes toward two things:

• Principal – The part of your loan that you’re paying down
• Interest – The cost of borrowing the money

Let’s say you buy a $400,000 home in Red Deer with 10% down ($40,000). That means you need a mortgage of $360,000. With a 5-year fixed rate of 3.99% over a 25-year amortization, your monthly payment would be about $1,895.

So Where Does Your Mortgage Payment Actually Go?

In the early months, most of your payment goes toward interest. For example, on a $350,000 mortgage at 4.75%, you might be paying about $1,200 in interest and just $695 toward your principal.

Over time, that ratio shifts. By year five, more of your payment is going toward building equity (your ownership in the home) and less is going toward interest.

That’s the power of a long-term plan. Even though it starts slow, every payment brings you one step closer to owning more of your home outright.

What’s the Process of Getting a Mortgage in Alberta?

1. Get pre-approved – We find your budget
2. Start home shopping – Now that you have a pre-approval, you know what you can afford
3. Apply – Once you find a place and have a deal, you can loop us back in
4. Finalize – Paperwork, approvals, and moving in!

Case Study: Emily’s First Place in Red Deer

Emily, a 27-year-old nurse, thought she couldn’t afford to buy. But with $25K saved, we pre-approved her for $350,000. She bought a $325,000 townhouse with 10% down and a 3.99% 5-year fixed mortgage.

Her payments: $1,710/month.

We helped her understand her rate, her term, and how to plan for future renewals. By setting up a simple, consistent monthly plan, she avoided surprises and built real financial confidence.

Glossary: Mortgage Terms You’ll Hear

• Principal – the money you borrow
• Interest Rate – the percentage charged by your lender for borrowing money to buy a home.
• Amortization – the total time to pay it off
• Term – how long your rate and deal last
• Down Payment – what you pay upfront
• Mortgage Insurance – required if your down payment is under 20%
• Fixed Rate – interest stays the same
• Variable Rate – interest can go up or down
• Prepayment – extra payments to pay off faster
• Closing Costs – additional fees such as legal fees and taxes that occur when you buy
• Equity – the part of the home you own
• Collateral – your home, which the lender can claim if you don’t pay

FAQs for First-Time Buyers in Alberta

1. How much do I need for a down payment in Alberta?

In Canada, the minimum down payment depends on the purchase price. For homes costing $500,000 or less, you need at least 5% of the price. If the home is priced between $500,001 and $1,499,999, the requirement is 5% on the first $500,000 and 10% on the rest. Homes priced at $1.5 million or more now require a 20% down payment.

2. Do I need mortgage insurance?

If your down payment is less than 20%, yes. Mortgage Insurance protects the lender (not you), but it also allows you to buy with less money upfront.

3. What’s the difference between a mortgage term and amortization?

Term is how long your current mortgage agreement lasts (usually 5 years). Amortization is how long it would take to fully pay off your mortgage (usually 25 or 30 years).

4. Can I get pre-approved before I find a house?

Yes—and you should! Pre-approval tells you how much you can afford, locks in a rate, and gives you confidence when shopping. We can help you get started in minutes.

5. What costs should I expect beyond the mortgage?

You’ll also need to budget for closing costs (legal fees, taxes, etc.), moving costs, and home maintenance. We’ll help you plan for everything—not just the mortgage.

6. How do I start the mortgage process?

Click here to apply or give us a call. We’ll walk you through every step, from pre-approval to move-in.

7. Where can I learn more about buying my first home?

We’ve put together a helpful resource just for you! Check out our First-Time Home Buyers Guide for everything you need to know—from mortgage basics to getting the keys.

Ready to Make It Make Sense?

Give us a call or fill out an application and our team will get in touch with you to start building a plan that suits you.