New Construction in Alberta's Active Market Alberta continues to see significant new home construction, particularly in Calgary's sprawling suburbs and Edmonton's expanding communities. Whether you're buying from a production builder or constructing a custom home, understanding construction financing helps you navigate this specialized mortgage category. Types of New Construction Financing Completion Mortgages (Most Common) Most buyers purchasing from production builders use completion mortgages: Builder finances construction Buyer gets mortgage at completion Deposit held by builder during construction Standard mortgage qualification applies This is the simplest approach—your mortgage doesn't fund until the home is complete and you take possession. Progress Draw Mortgages For custom builds or when the builder doesn't finance construction: Mortgage funds in stages as construction progresses Typical draws at foundation, framing, lock-up, and completion Interest charged on funds advanced Inspections required before each draw Self-Build Financing If you're acting as your own general contractor: More complex qualification requirements May need demonstrated construction experience Higher down payments often required Specialized lenders needed Pre-Construction Timeline and Deposits Typical Deposit Structure Alberta builders typically require: Initial deposit: $5,000-$10,000 at signing Additional deposits: Often at permit and frame stages Total deposits: Usually 5-15% of purchase price Deposit Protection Alberta has limited new home warranty coverage. Understand: What warranty program covers your builder Deposit insurance limits Completion guarantees Rate Holds for New Construction Standard Rate Hold Period Most lenders offer 90-120 day rate holds, but construction timelines often exceed this: Initial rate hold locks current rate If construction extends beyond hold period, rate may change Some lenders offer extended holds for construction (180-365 days) Extended Rate Hold Options For longer construction timelines: Ask about builder-specific programs with extended holds Some lenders offer construction hold programs Rate premium may apply for extended holds Consider whether rate lock is worth the premium Rate Hold Strategy Given construction delays are common: Get rate hold as close to completion as possible Budget for potential rate changes Understand your rate hold renewal options Qualification for New Construction Standard Requirements New construction mortgages require: Standard income and credit qualification Stress test at qualifying rate Minimum down payment (5% for owner-occupied) Construction-Specific Considerations Qualification based on projected completion date Income must remain stable until completion Job changes during construction can affect approval Pre-approval is not final approval Progress Draw Additional Requirements For progress draw mortgages: Fixed-price construction contract Builder qualifications and licensing Detailed construction specifications Building permits in place Builder Incentives and Financing Common Builder Incentives Alberta builders often offer: Mortgage rate buy-downs: Builder pays to reduce your rate Closing cost contributions: Builder credits toward fees Upgrade packages: Free upgrades instead of rate discounts Preferred lender programs: Incentives for using builder's lender Evaluating Builder Financing Offers Before accepting builder financing incentives: Compare total cost to independent financing Understand if rate discount is for full term or limited period Check if mortgage has restrictive terms Consider prepayment penalties and flexibility GST on New Construction New Housing GST New homes in Alberta are subject to 5% GST: Builder price may or may not include GST Clarify what's included in your contract price Factor GST into your budget GST New Housing Rebate You may qualify for a partial GST rebate: Homes under $350,000: Maximum 36% rebate on GST Homes $350,000-$450,000: Sliding scale rebate Homes over $450,000: No rebate on federal portion Builder typically applies rebate to reduce your price Construction Delays and Financing Planning for Delays Construction delays are common in Alberta due to: Weather (especially winter impacts) Material and labor shortages Permit and inspection timing Change orders and modifications Financing Implications of Delays Rate hold expiration risk Extended rental costs if selling current home Qualification changes if income situation changes Contract provisions for significant delays Mitigating Delay Risks Include delay clauses in your purchase contract Maintain flexibility in current housing situation Keep income and credit stable Stay in communication with lender Pre-Delivery Inspection Before taking possession: Complete thorough pre-delivery inspection Document any deficiencies Understand warranty coverage Know your recourse for incomplete items Closing on New Construction Possession Day Requirements Final mortgage approval and funding Home insurance in place Utility connections arranged Legal documents completed Closing Costs for New Construction Budget for: Legal fees Title insurance Property tax adjustments Immediate purchases (window coverings, appliances if not included) Landscaping deposits if applicable Your New Construction Journey Building new in Alberta offers the opportunity to customize your home while often accessing builder incentives. Start with mortgage pre-approval to understand your budget, then work with builders who have strong reputations and clear financing processes. Understanding construction financing timelines and requirements helps you navigate the process from deposit to possession day with confidence. Ready to Get Started? Contact us today for personalized mortgage advice and competitive rates. Get Pre-Approved Call (416) 822-7357
