How does a construction mortgage work?

Funds are advanced in stages (draws) as verified milestones are completed — foundation, framing, lock-up, finishes, and possession. You only pay interest on funds already drawn, not the full loan amount.

Can I include the land purchase in the construction mortgage?

Yes. Many lenders will include land acquisition costs within the construction mortgage, or structure a separate land loan that converts to a construction facility once building begins.

Do I pay the full mortgage during construction?

No. Most construction mortgages are interest-only on drawn funds during the build. Once construction is complete, the loan converts to a regular amortizing mortgage.

How much can I borrow for a construction mortgage?

Most lenders go up to 65–75% of the completed appraised value. The amount depends on your income, credit, down payment, and the appraiser's projected finished value.

What if my build goes over budget?

Cost overruns are common. We recommend building a 10–15% contingency into your budget from the start. We can also help structure your financing with a buffer or identify supplementary options if needed.

Construction FinancingToronto & GTA

Your home,
built right.
Funded every step.

Construction financing that advances with your build — releasing funds at each verified milestone, from breaking ground to handing over the keys.

Apply Now Call 416-262-LOAN (5626)

Loan to Value

Up to 75%

of completed value

During Build

Interest-only

on drawn funds only

Newly built modern home in Toronto urban neighbourhood

Residential home renovation in progress in Canada

Family watching their new home being built

How it works

A mortgage that builds alongside your project.

Unlike a standard mortgage where the full amount is advanced at closing, a construction mortgage releases funds in stages — called draws — as verified milestones are completed on-site.

You only pay interest on funds already drawn.

This keeps your carrying costs lower during construction and aligns your financing with the actual progress of the build. Once possession is granted, the loan converts to a standard amortizing mortgage.

Financing types

Three ways to finance a build or renovation.

Every project is different. We match you to the right structure — and the right lender — based on your project scope, timeline, and financial profile.

Ground-up builds

New Construction

Finance the complete build of a new home from foundation to possession. Works with licensed general contractors and owner-builders in qualifying circumstances.

Draw-based funding

Major Renovation

For significant structural renovations where funds need to be released progressively as work is completed and verified by inspector or appraiser.

Single mortgage

Purchase + Improvement

Buy a home and finance upgrades in one mortgage. Ideal for buyers who find a property that needs work before move-in — simpler and often lower-cost than two separate loans.

Draw schedule

Funds advance as milestones are verified.

Each draw is released after an independent inspector confirms the stage is complete. This protects both you and the lender — and ensures funds track actual progress.

Draw

Stage

Scope of work

Draw 1

Foundation

Site clearing, excavation, footings, foundation walls, waterproofing, backfill

15%

Draw 2

Framing

Structural framing, roof structure, sheathing

20%

Draw 3

Lock-Up

Roofing, windows, exterior doors — weather-tight

15%

Draw 4

Rough-Ins

Electrical, plumbing, HVAC rough-ins, insulation, vapour barrier, drywall, inspections

15%

Draw 5

Finishes

Flooring, cabinetry, trim, paint, siding/brick (progress-based)

20%

Draw 6

Possession

Final inspection, appliances, fixtures, landscaping, certificate of occupancy

15%

All advances are subject to on-site inspection and lender approval. Exact draw percentages vary by lender and project type.

Qualification

What lenders evaluate beyond your credit score.

Construction mortgage approvals are more complex than standard residential mortgages. Lenders evaluate the project itself — not just your personal finances.

Completed value appraisalLenders lend against the projected finished value, typically 65–75% of that figure.
Builder qualificationsLicensed GC, tarion registration, or owner-builder status all affect which lenders apply.
Detailed project budgetLine-item cost breakdown covering labour, materials, permits, and a contingency reserve.
Income & credit profileStandard qualification criteria — your income, credit, and existing debts all factor in.
Down payment or equityTypically 20–25% of total project cost. Can be land equity plus cash.
Construction timelineMost lenders work with 12–18 month build windows; longer timelines require specific lenders.

Residential home renovation framing in progress

Newly built modern home at night in urban neighbourhood

Before you break ground

Six things that protect your project.

Construction projects that go wrong usually fail for the same reasons. Here's what experienced builders — and experienced brokers — recommend before you start.

Budget a contingency from day one

Cost overruns are the rule, not the exception. Build a 10–15% contingency into your total project budget before financing is approved.

Have a licensed contractor before you apply

Most lenders require a signed contract with a licensed general contractor. Owner-builder programs exist but have stricter requirements.

Understand draw timing and cash flow

Draws are released after inspections — which can take days to weeks. Your contractor needs to bridge costs between draws. Plan for this.

Lock in your permanent rate early

Interest rates can change during a 12–18 month build. Ask about rate holds or blending strategies to protect your long-term financing.

Document every change order

Lenders can reduce or delay draws if the scope has changed materially from the approved budget. Keep written records of every change.

Keep your mortgage advisor close

We communicate directly with the lender, inspector, and your lawyer throughout the build. Fewer surprises, faster draws, better outcomes.

The process

From first conversation to possession day.

Initial consultation

We review your plans, budget, builder details, and timeline to identify the right lender and structure.

Appraisal & approval

Lender orders an as-complete appraisal. We submit your file and manage conditions through approval.

Mortgage registration

Your lawyer registers the construction mortgage. Land purchase (if included) can close at this stage.

Draw advances

As milestones are completed, we coordinate inspections and draw requests with the lender on your behalf.

Possession & convert

Final inspection, certificate of occupancy, mortgage conversion to permanent amortizing terms — and keys in hand.

Happy family at their new home being built from the ground up

Why work with us

We've done this before — many times.

Construction financing is specialized. A broker who doesn't know the draw process, lender appetite, or appraisal requirements can slow your project down or cost you significantly more.

"The right construction mortgage isn't just about the rate — it's about the draw process, the lender's flexibility, and having an advisor who stays engaged through the entire build."

We stay involved throughout your project — coordinating draws, communicating with your builder and lawyer, and making sure your financing keeps pace with your build.

Construction specialists

We've structured draw-based financing for custom builds, major renos, and land-plus-build transactions.

30+ lenders

Banks, trust companies, credit unions, and private lenders — including those with flexible construction programs.

Draw management

We coordinate inspections and lender draw requests on your behalf — no chasing paperwork mid-build.

Your side of the table

Our fee is paid by the lender at funding. Expert guidance throughout your project at no cost to you.

Serving the GTA

Deep knowledge of local builders, permit timelines, and lender appetite across Toronto and surrounding regions.

Long-term thinking

We structure your construction financing with your permanent mortgage in mind — so the conversion is seamless.

Questions

What most clients ask us before they start.

Construction mortgages have more moving parts than a standard purchase. We're happy to walk through every question before any commitment is made.

Funds are advanced in stages (called draws) as verified milestones are completed on-site. An inspector or appraiser confirms each stage before the lender releases the next tranche. You pay interest only on funds already drawn — not the full approved amount — which keeps carrying costs lower during the build.

Let's get started

Ready to build? Let's
talk through the numbers.

The conversation is free. We'll review your plans, project budget, and timeline — and tell you exactly what financing is available and how to structure it.

Whether you're at the land-search stage or already have a contractor lined up — the earlier we're involved, the smoother your project will go.

Call 416-262-LOAN (5626)

Serving Toronto, the GTA & all of Ontario · mortgagemadebetter.com
Lic. 13747 · FSRA Regulated Brokerage

Your home,built right.Funded every step.