How to Finance a New Home Build

A Are you planning on building your dream home? But unsure of how the finances work for how you can afford to build it? You’ve made it to the right place to get more information about your options to finance your new build!

B Banks want to loan you the money, they just want to make sure that you are financially secure enough to take on the loan! Pre-existing homes (homes on MLS, also known as Resale homes), are easier to finance as typically a mortgage broker can look into your finances (income, savings, debt) and approximate how much you can afford (typically 5x your salary + downpayment or savings – debt/loans).

F For a new build inner-city home, there are two typical mortgages that people can get from either private lending or institutions (like banks): Draw Mortgages (AKA Construction Loan), and Completion Mortgages. A draw construction loan is disbursed to the builder typically in 3 stages:
  1. 35-40%: Foundation & Framing of the exterior home is completed, and electrical, plumbing is roughed in (This stage is typically called the lock-up stage)
  2. 65-70%: Interior drywall is completed, heating is installed in the home, and exterior is mainly done (except for some cosmetic like painting or masonry)
  3. 100%: Home is 100% completed and ready to pass to the final end-user (whether it is up for sale on the market, or the client the home is built for). The occupancy permit is completed.

Every lending institution is different and some lenders may provide up to 5 stages of payment, an appraiser would be hired by the lender to verify that all these stages have been completed.

H The price of the new build will depend on many factors. Did you already purchase the lot? Do you need to demolish the existing home? What kind of appliances are you planning to put in your home? Do any of the service lines need to be moved with the property? Is the basement a secondary suite? Is your garage heated, or are you putting on a garage suite on top? We will talk more in-depth about budgeting your new home infill build in another blog article.

T Talk to us if you are ready to purchase your new home, or if you want to learn more about building and financing your custom inner-city infill

A Always get advice from a qualified professional about financing your new home, contact us at to be referred to our specialists that will provide you with the best information with moving forward with your project needs.