Justification is by faith only/faith alone.

We are justified, regenerate, redeemed, atoned for, at a punctiliar moment in time. “For by grace you have been saved through faith,  and this not of yourselves, it is the gift of God; not of works, so that no one may boast.”  (Ephesians 2:8-9). And again Paul doubles down saying, “For we maintain that a man is justified by faith apart from works of the Law” (Romans 3:28) because “by the works of the law no flesh will be justified in his sight” because the law brings knowledge of sin  (Romans 3:20). 

Since we are not justified by works, that is, we are not accepted as righteous in the sight of God by anything wrought in us or done by us, but for the sake of Christ only, by the imputation of his satisfactory obedience unto us, we cannot claim any credit for what we have been given as if we have worked at all for it. Faith then, being the sole instrument of our justification, is us receiving and resting on Christ and his righteousness alone. This faith, however, is never alone in the person justified but is accompanied by all other saving graces, is alive, and works through love. (WCF 11.1-2) 

Our works

Our works, which may be called good, are only such as God has commanded in his word, and not those which are devised by men out of blind zeal, or upon any pretense of good intention (WCF 16.1). After the moment of our justification – which is based upon the free grace of God alone – we are being sanctified by the Spirit of God, and those works which God has prepared beforehand for us to walk in are the manifest proof of the Spirit’s work in our hearts (Ephesians 2:10). 

These works are inevitable in the redeemed because God has made us his workmanship (Ephesians 2:10) and he is no unskilled artisan. These works are also taken into account on the last day as that by which the sheep are distinguished from the goats (Matthew 25:31-46). These works, however, do not add anything to the individual’s salvation. At the moment of justification the sinner is eternally sealed in Christ by the earnest of the Holy Spirit (1 Corinthians 1:21-22; Ephesians 1:14), and because of the eternal decree of God, that the end of those who are foreknown would be glorification  (Romans 8:29-30).

That being said, however, Paul makes clear that these works are vitally important for the life and salvation of the believer. We are to pursue sanctification (the holiness) because without this no one will see the Lord (Hebrews 12:14). This is primarily because, as Paul says elsewhere, “God has chosen [us] as the first fruits for salvation through sanctification by the Spirit and faith in the truth (2 Thessalonians 2:13). So here, holiness and sanctification are now being applied to our salvation, as opposed to our justification. Without the former (holiness) we will not see the Lord, and we are saved through the latter (sanctification). And it goes without saying that both are wrought by the Holy Spirit, which means they will happen, and this is based upon the eternal decree of God, not the mustering of merit by man.  

Salvation and Justification

But here we need to distinguish between salvation and justification. These words are often used interchangeably within the church, theological jargon, and even the Bible  (compare Ephesians 2:8-9 and Romans 3:28) but the term salvation (and justification for that matter) have a broader semantical range that should be employed strategically, and the nuance explained thoroughly. Paul does not speak out of both sides of his mouth when he says that salvation is through sanctification and that man is justified by faith apart from works of the law. He means two different things. By justification is meant, as I said above, that punctiliar moment when our heart is quickened by the Holy Spirit, our sins are imputed to Christ, and his righteousness imputed to us. And by salvation is meant what John Calvin calls “subordinate justification” and what others have called  “future justification” or “final salvation.” Notice what other theologians say concerning this doctrine, 

"But though it is by Mercy alone that God admits His people to life, yet as he leads them into possession of it by the course of works, that He may complete His work in them in the order which He has destined, it is not strange that they are said to be crowned according to their works, since by these doubtless they  are prepared for receiving the crown of immortality." - John Calvin, Institutes  3.18.1 

"Too often we use justification and salvation interchangeably, so the suggestion that we are justified without any condition other than faith leads some to conclude that it is the only condition of salvation." ~ Michael Horton 

"Hence arises the necessity of good works to glory; not of merit, but of means.  No one can be glorified in heaven who has not been sanctified on earth by the pursuit of holiness and obedience to the law." ~ Francis Turretin, Institutes of  Elenctic Theology, Topic 11, question 23 

“In both Paul and the Old Testament, holiness is "the indispensable though not meritorious condition of receiving the inheritance." ~Geerhardus Vos, Biblical  Theology, 218. 

The works the Bible says we will do are not meritorious as if faith needed helping, but they are, as Vos says, “the condition upon which our inheritance is received.” This is what James means when he speaks of “justification by works.” In the same way Paul means justification when he uses the word “salvation” in Ephesians 2:8-9, James means salvation when he uses the word “justification” in James 2. James 2:13-26 is in the context of final judgment - V13 says: “Judgment will be merciless to one who has shown no  mercy; mercy triumphs over judgment.” And so when James enters into his treatise on the relationship between faith and works, he says that faith, without the animating principle of works, is dead. Or said another way, Faith is animated by our works, which indicates our faith is alive. Faith animated and alive is a faith that works through love (Galatians 5:6).  This must be the case because true faith will produce the works that God has prepared beforehand for it to produce, and those works, as stated above, are works unto, but not meriting glory. Therefore, when James says that a man is justified by works, and not by faith alone, he is speaking of a vindication on the last day, that final salvation, not the initial momentary justification Paul speaks of elsewhere.  

Conclusion

And so, sanctification becomes part of our salvation. Our justification leads to a guaranteed sanctification that produces works prepared beforehand so that the sinner cannot help but perform and walk in them, which is what the Lord uses to vindicate both the sinner and himself. The sinner is shown to have true faith from and in his works and is thereby vindicated on that last day, and God is likewise vindicated because his purchase of a filthy sinner by the blood of his Son is shown to have been a worthwhile investment - worthy of the precious blood of his Son. God can say, “I have brought to perfection him whom I began this work in.” 

Works merit the Christian nothing. Works, however, are used by God in some way for our salvation that is not entirely known to me. But we must end with the words of John Davenant,

"Besides, we ought to regard eternal life as our goal and end; but this goal is never reached except in the way of good works. For that broad way of licentiousness and impiety leads straight to hell, as Christ Himself assures us (Matt 7:13-14). It being understood then, that we are seeking the kingdom of heaven, we must necessarily enter upon the way which leads to the kingdom of heaven - the way of good works." ~ John Davenant, Treatise on Justification