Construction Mortgages & Draw Financing
How construction draws actually work in Ontario, from raw land to occupancy.
How a construction mortgage is structured
A construction mortgage funds in stages — typically 4 to 6 'draws' aligned with build milestones: foundation, framing/lockup, drywall/heating, and completion. The lender disburses funds as each stage is verified by an independent appraiser, and you pay interest only on the amount drawn until completion.
Self-build vs builder-build
Self-built homes (acting as your own contractor) face more lender restrictions and typically require larger contingencies and stronger equity positions. Builder-built homes with a fixed-price contract qualify more easily; the builder's experience and the contract's transparency drive lender appetite.
Land equity and required down payment
Most construction mortgages require 20% of total project cost (land + build) as your contribution. If you already own the land outright, that equity often satisfies most or all of the down payment requirement.
Cost overruns and contingency
Lenders require a 10–15% contingency budget on top of your build cost. Overruns beyond that come out of your pocket or trigger a costly re-application. Realistic budgeting upfront avoids most construction-loan stress.
Converting to a permanent mortgage
On completion, the construction loan converts to a standard residential mortgage — typically a 5-year fixed or variable. Some lenders auto-convert, others require a fresh application. Jay coordinates the timing so the conversion happens without a gap in coverage.
Have questions about your situation?
Every mortgage file has its own story. A 15-minute call with Jay is enough to know your real options.