Know which kind of new-build financing you are actually in before you sign anything

Two completely different products get called a construction mortgage, and telling them apart is the single most useful thing on this page. Buying a new home from a builder in a community pays out at completion. Having a custom home built for you pays out in draws as it goes up. Confusing the two is how people end up with the wrong lender, the wrong rate hold, and a deposit they had not planned for.

Which one are you actually in

	New home in a community, including pre-construction	Custom build
Who holds your money during the build	The builder, as a deposit	Nobody. Funds are advanced in stages
When the lender advances funds	Once, at completion	At each draw stage, after inspection
What you pay during the build	Nothing to the lender	Interest on the funds advanced so far
Deposit	Commonly 5, 10 or 20 percent to the builder	Usually land equity or cash into the project
Inspections	One appraisal	One before each draw
Rate hold needed	As long as possession is out, up to about 18 months	Shorter, but the build timeline still matters

If you are not certain which column you are in, that is the first conversation, and it takes about five minutes.

Buying new in a community, including pre-construction

This is most new construction in Alberta, and it is not a draw mortgage.

You sign with the builder, you pay them a deposit up front, and they build the home. The deposit is commonly 5, 10 or 20 percent depending on the builder, it goes to the builder rather than to a lender, and it counts toward your down payment rather than sitting on top of it. Your lender advances nothing during the build. The mortgage funds at completion, the builder is paid out in full at that point, and you take possession.

Mechanically it behaves like a purchase with a very long gap between the agreement and the funding. That gap is the whole story, and it is where the risks live.

The rate hold has to reach possession

Possession can be a year or more out on a pre-construction home, so the rate hold has to stretch that far. The longest generally available is around 18 months depending on the lender, and on these files the length of the hold matters as much as the number attached to it. A sharper rate that expires two months before you get keys is worth nothing.

Build timelines also slip, which is normal rather than alarming. What matters is knowing in advance what happens if yours does. If possession moves past the end of your hold, you are either extending with the same lender or re-pricing at whatever the market looks like on the day, and which of those is available depends on the lender you started with. Ask that question at the beginning, not in month sixteen.

Your file gets re-checked, so keep it still

Some lenders verify income and credit up front and are done. Others pull credit again about a month before closing and ask for fresh pay stubs and a job letter. On a build that is 18 months out, assume it will be re-checked.

Do not change jobs, do not finance a vehicle, and do not take on new debt while the house is being built. A file approved comfortably in month one can fail in month sixteen for reasons that have nothing to do with the house, and by then your deposit is committed.

GST, and the rebate that changed in 2025

A new home attracts GST. A resale home does not. That difference is worth real money on an Alberta new build, and it now cuts in a first-time buyer’s favour more than it ever has.

Since 2025, a first-time buyer can recover up to $50,000 of the GST paid on a new home. The rebate is full on a home valued at $1,000,000 or less, tapers between $1,000,000 and $1,500,000, and is gone above that. To qualify you must be at least 18, a Canadian citizen or permanent resident, and not have lived in a home that you or your spouse or common-law partner owned as your primary residence in the current calendar year or the previous four. The purchase agreement has to be signed on or after March 20, 2025, construction has to begin before 2031, and ownership has to transfer before 2036.

Two practical notes. Builders handle GST differently in their contracts: some quote a price with GST included and the rebate assigned to them, others quote net of GST and leave the rebate for you to claim. Which one your contract uses changes the cash you need at closing, so ask before you sign. And the older new housing rebate, the one that phases out between $350,000 and $450,000, still exists for buyers who are not first-time buyers, though at Alberta new build prices it rarely reaches far.

The 30-year amortization on a newly built home

Here is an advantage of buying new that most buyers never hear about.

On an insured mortgage, meaning less than 20% down, the amortization is normally capped at 25 years. There are two exceptions: first-time buyers, and buyers of newly built homes. Either one can take 30 years.

A longer amortization is a cash flow tool, not a saving. The payment falls, the total interest rises, and the mortgage runs five years longer. But on a new build the option is on the table whether or not you have owned before, and for a family stretching into a bigger home it is sometimes what makes the payment work. It is also reversible in effect: prepayment privileges let you pay it down faster than the schedule if your income improves.

Alberta’s warranty rules, and why they matter to your file

Alberta regulates this more tightly than most people realise, and it works in a buyer’s favour.

Every new home built in the province since February 1, 2014 must carry warranty coverage. Every residential builder since December 1, 2017 must hold a valid builder licence, which the permit issuer verifies against the provincial registry before a permit is issued. The minimum coverage is:

• One year on labour and materials
• Two years on delivery and distribution systems, meaning electrical, plumbing and heating
• Five years on the building envelope
• Ten years on major structural components

You can look a builder up in the public registry yourself before you sign anything, and it takes about a minute. Because the coverage is a legal requirement rather than a selling feature, a new build file where nobody can produce the warranty registration is a file with something wrong in it.

Owner-builders are the exception: someone authorised to build their own home can choose to build without warranty coverage, which is one of several reasons a self-build is a different animal, financially and legally, from a builder’s home.

Having a custom home built

This is the draw mortgage, and it works completely differently. The lender releases money in stages as the build reaches agreed points of completion, and each release follows an inspection confirming the work is really there.

Schedules are set by the lender, so the only one that matters is the one on your file. As a concrete example, ATB is a lender I use often on these, and their stages run roughly like this:

• Foundation and excavation, at about 15 percent complete
• Lock-up and building envelope, at 40 to 50 percent
• Drywall and mechanical, at 65 to 70 percent
• Substantial interior finishes, at 85 to 90 percent
• Final completion and occupancy at 100 percent, though ATB will generally advance that final draw at 97 percent

Other lenders sit near this without matching it. What matters is that your builder’s cash-flow expectations and the lender’s release points line up. A builder who needs money at 30 percent and a lender who releases at 40 is a problem you want to find on paper rather than on site, and it is one of the first things I check.

What a draw build costs you while it is going up

Three costs surprise people on this route, and none of them are hidden. They just do not appear on a payment calculator.

Interest on what has been advanced. You pay interest on the money released so far, rising as the build progresses, and on most files it is interest only until completion. Early draws cost little; the last few cost a good deal more.

Your existing housing. You are usually renting or carrying another mortgage at the same time. That overlap has to be in the budget from the start, and lenders will want to see you can manage both.

Inspection and appraisal fees at each stage. Each draw is verified, and verification is not free.

Do you own the land

Owning the lot outright puts equity into the project from day one and often improves how the financing is structured. Buying land and building on it as one transaction is also workable, and financing bare land on its own is a different product again, with a larger down payment and a shorter term.

Tell me which situation you are in early, because it affects the lender list and what your builder is likely to ask of you. Servicing matters too: a serviced lot in a town and an unserviced parcel on an acreage are not the same file, and the well and septic questions on the second one arrive early rather than late.

The one I will turn down

Self-build, where you act as your own general contractor, is not something my lender panel will finance. That is a limitation of the lenders I work with rather than a judgment about your project, and you are better off hearing it today than after three weeks of paperwork. I know someone who specialises in self-build and I am glad to make the introduction.

The appraisal, on either route

If the finished home appraises below the price you agreed, you cover the difference in cash and you still bring your original down payment. The shortfall sits on top of the down payment rather than coming out of it.

That is the outcome worth designing against, and the way to design against it is an appraisal done up front wherever the file allows. Knowing the value early turns a possible crisis into a planning conversation. In practice, finished homes coming in below value is not something we see often, precisely because the appraisal happens early rather than at the end.

What to ask your builder before you sign

Bring the answers to these and I can tell you in one conversation whether the financing works.

1. What is the deposit, when is each instalment due, and does it count toward my down payment?
2. Is the price GST-included, and who claims the rebate?
3. What is the expected possession date, and what does the contract say if it moves?
4. Are you licensed, and which warranty provider covers this home?
5. On a custom build: when do you need money, and in what amounts?
6. What is included, and what is an allowance that could rise before completion?

What happens when you call

Tell me whether you are buying from a builder in a community or having a home built for you, what the builder has said about deposits, and roughly when possession lands. Those three answers tell me which product you are in, which lenders fit, and how long a rate hold you need.

Call before you sign with the builder rather than after. The conversation is free, there is no obligation, and there is no credit check just to have it.

Sources: the first-time home buyers’ GST/HST rebate amount, thresholds and eligibility come from the Canada Revenue Agency’s pages on what the rebate is and who can apply. The 25 and 30 year amortization rules on insured mortgages are CMHC’s, from its Purchase product fact sheet. Builder licensing, mandatory warranty and the coverage periods are from Alberta’s new home warranty overview. The ATB draw percentages are from files I have arranged and are an example rather than a published schedule.