Canada new construction mortgage in 2027: draws, extended amortization, and CMHC rules

A progress-draw mortgage (also called a construction mortgage) funds a new home in stages as construction milestones are completed — typically foundation, framing, lock-up, drywall, and completion. At each draw, the lender sends an inspector to verify the milestone, then releases funds to the builder. You only pay interest on the amount drawn. CMHC's new construction guide covers how progress draws work and what to expect at each milestone inspection.

As of August 2024, the federal government extended access to 30-year amortizations for insured mortgages (less than 20% down) for two groups: first-time homebuyers and buyers of new construction. Previously, insured mortgages were capped at 25-year amortization. A 30-year amortization on a $600,000 mortgage at 5.5% reduces the monthly payment by approximately $280 versus 25 years — but results in significantly more interest paid over the life of the loan. The Department of Finance backgrounder on 2024 mortgage reforms explains eligibility and conditions.

CMHC premiums are calculated on the insured loan amount, not just the purchase price. For new construction, the purchase price used for insurance purposes is typically the contract price (not the appraised value at completion, which may differ). Premiums range from 2.8% (10–15% down) to 4.0% (5% down). On a $700,000 new build with 5% down ($35,000), the premium is $665,000 × 4.0% = $26,600 — added to your mortgage balance. CMHC's premium calculator shows the exact premium for your purchase price and down payment.

Buyers of new-construction homes in Canada may qualify for a federal GST/HST New Housing Rebate on homes priced below $450,000 (with partial rebates up to $524,999). The rebate is 36% of the GST paid, up to $6,300. Provincial rebates vary. For homes above $450,000, no federal rebate applies — but you still pay 5% GST (or applicable HST) on the full price. CRA's GST/HST New Housing Rebate guide includes the eligibility criteria and province-specific rebate calculations.

Most Canadian lenders offer rate holds of 90–120 days for new construction, with some specialty lenders extending to 24 months for pre-construction condos. If construction is delayed beyond your rate hold, you may face a rate extension fee or need to re-lock at current market rates. Some lenders offer "float-down" provisions that allow you to take a lower rate if rates drop before closing. RateHub's new construction mortgage guide covers rate hold options and what to negotiate with your lender before signing a pre-construction agreement.

Yes. The First Home Savings Account (FHSA) can be used for a qualifying first home purchase, including new construction — the home just needs to be your principal residence and you must not have lived in a home you owned in the previous four years. For a pre-construction condo, the FHSA funds can be withdrawn at closing even if construction began earlier. Withdrawals must happen before December 31 of the year following the year you make the withdrawal agreement. The CRA's FHSA page defines qualifying home purchases and withdrawal conditions.