Building your dream home? Get the financing you need with progress draw schedules, competitive rates, and expert guidance through every stage of your build.
Understanding how construction financing works in Canada
A construction mortgage provides financing to build a new home on land you own or are purchasing. Unlike a traditional mortgage where you receive the full amount upfront, construction mortgages are disbursed in progress draws as specific building milestones are completed.
You pay interest-only during construction on the amount drawn. Once construction is complete, the mortgage converts to a standard mortgage with principal and interest payments. The entire process typically takes 6-18 months depending on the build.
You act as your own general contractor, managing the build and hiring sub-trades directly.
A licensed contractor builds your home based on your plans and specifications.
Building a home to sell on speculation, not as your primary residence.
Typically 75-85% of total build costs (land + construction)
Usually 6-12 months with option to extend if needed
Pay only interest during construction, not principal
Funds are released as your build reaches key milestones
Initial draw to purchase land and prepare site
Basement or slab foundation poured and cured
Structure framed, roof on, windows and doors installed
Rough-in plumbing, electrical, HVAC, insulation
All finishes, fixtures, and final occupancy permit
Each draw requires an inspection by the lender's appraiser to verify the work has been completed. Draw percentages may vary by lender and project type. Always budget for a 10-15% contingency for unexpected costs during construction.
What lenders look for in construction mortgage applications
Down Payment: 20-25%
Of total project cost (land + build)
Credit Score: 680+
Good credit history required
Debt Ratios: Under 44%
Total Debt Service (TDS) ratio
Reserves: 3-6 Months
Cash reserves for mortgage payments
Detailed Building Plans
Architect or designer plans with specs
Cost Breakdown
Detailed construction budget
Builder Agreement
Contract with licensed builder
Building Permits
Approved municipal permits
$500-$1,500 for land and progress inspections
$2,000-$5,000+ depending on municipality
Course of construction insurance required
Budget for interest-only payments during build
Let's discuss your construction project and get you the financing you need.