Trusted mortgage services
Construction loans to build your home
Building a custom home, a laneway house or a major addition? We find a lender whose draw schedule fits your build.
- 5-yr fixed
- 4.89%
- 5-yr variable
- 3.70%
Updated Oct 25 · on approved credit · Compare to bank rates
How construction financing works
A construction mortgage, also called a draw mortgage, pays for your build in stages instead of all at once. After each stage, such as foundation, framing, lock-up and completion, the lender sends an appraiser or inspector to confirm the work, then advances the next portion of the loan. During the build you usually pay interest only on the money drawn so far.
Construction lending is more specialized than a regular mortgage. Lenders differ on how many draws they allow, how much of the cost they will fund, whether they lend to owner-builders and how they handle cost overruns. We compare those details, not just the rate, so the money arrives when your builder needs it.
Who construction loans are for
Building on your own lot
You own the land, or are buying it, and want to build a new home. Equity in land you already own often counts toward your contribution.
Laneway homes and additions
Adding a laneway house, garden suite or major addition to the home you already own, often financed alongside your existing mortgage.
Owner-builders
Managing the build yourself. Fewer lenders work with owner-builders, and they will want to see your experience, budget and a realistic schedule.
How it works
From plans to keys
Plans and budget
Bring your plans, permits or permit application, builder contract and a detailed cost breakdown. Lenders base the loan on the cost to build and the expected value when finished.
Approval and first advance
Once you are approved, the mortgage is registered. The first advance usually pays for the land if you are buying it, or is released when the first stage of work is complete.
Draws during the build
At each stage an inspector or appraiser confirms progress and the lender releases the next draw. BC's Builders Lien Act requires a 10% holdback on the value of the work for 55 days after completion, which limits your exposure to liens from unpaid trades, and many lenders hold it back from each draw.
Completion
When the home is finished and has its occupancy permit, the final draw is released and the loan becomes a regular mortgage.
Frequently asked questions
You have questions — we have answers!
Construction Loans
How much down payment do I need for a construction loan?
It depends on the lender and on whether the mortgage is insured. Insured progress-draw mortgages are available for homes you will live in, with a smaller down payment, while conventional construction loans usually need 20% or more of the total cost, including the land. Equity in land you already own counts toward it.
Do I make full mortgage payments during construction?
Usually not. Most construction loans charge interest only on the amount drawn so far, so your payments start small and grow with each draw. Regular payments of principal and interest start when the home is complete and the loan becomes a regular mortgage. If you are still paying rent or another mortgage during the build, plan for both, because lenders count those costs when you qualify.
What happens if the build goes over budget?
Lenders fund against an approved budget, so overruns are usually yours to cover in cash before the next draw is released. A lender may also hold back money if the work done doesn't match what has been spent. Build a contingency into your plan, and keep the invoices for each stage organized. If costs climb a lot, we can ask whether your lender will increase the loan, but that needs a new approval.
Can I get a construction loan if I'm building the home myself?
Yes, but fewer lenders work with owner-builders. They want to see your building experience, a detailed budget and schedule, your plans and permits, and enough of your own money to carry the project. In BC you also need an Owner Builder Authorization from BC Housing to build a new home without a licensed residential builder. Expect to put in more of your own money than with a contractor, with each draw released only after the stage is inspected.
How do I finance a laneway house or garden suite?
It depends on your equity. A refinance or a home equity line can pay for it, and some lenders offer construction-style draws on a refinance so the money arrives as the work progresses. If you live in the home, the federal secondary suite program lets eligible owners refinance with an insured mortgage of up to 90% of the home's value after the work, if that value is under $2 million and the new unit isn't used as a short-term rental.
Today's rates
Our rates vs the banks'
We shop 50+ lenders, so the rate you're offered isn't limited to one bank's rate sheet. Updated Oct 25.
Apply for your mortgage in minutes
Everyone's rate is different. What's yours?
Our job is to find you a competitive rate and terms that fit. Your rate qualification depends on certain factors, such as credit score and home equity, as per Canadian regulations. Get your details fast — there's no cost and no obligation.
- Current variable mortgage rate
- 3.70%
- Current prime rate
- 4.45%
| Term | Bank posted | Our rates | Action |
|---|---|---|---|
| 6 Months | 5.54% | 5.09% | Get this rate: 6 Months |
| 1 year fixed | 5.49% | 4.79% | Get this rate: 1 year fixed |
| 2 year fixed | 5.39% | 4.59% | Get this rate: 2 year fixed |
| 3 year fixed | 6.05% | 4.69% | Get this rate: 3 year fixed |
| 4 year fixed | 5.99% | 4.84% | Get this rate: 4 year fixed |
| 5 year fixed | 6.19% | 4.89% | Get this rate: 5 year fixed |
| 7 year fixed | 6.40% | 5.09% | Get this rate: 7 year fixed |
| 10 year fixed | 6.80% | 5.09% | Get this rate: 10 year fixed |
| 5 year variable | No bank rate | 3.70% | Get this rate: 5 year variable |
Bank posted rates are the big banks' posted rates published by the Bank of Canada (1, 3 and 5 years) and by Dominion Lending Centres (other terms). Some conditions may apply. Rates may vary from province to province. Rates subject to change without notice. Rates change often and depend on your down payment, credit and property; on approved credit (O.A.C.). E.&O.E.
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Contact info
Call, email or send us a message. We negotiate with over 50 lenders to find the right mortgage for you.
- Our location525 W 8th Ave #800, Vancouver, BC V5Z 1C6
- Phone number778-838-8005
- Email addressinfo@coastalblue.ca