New Construction Mortgages in Edmonton: Progress Draws Explained for 2026

Building a custom home in Edmonton or buying a new-build with a long completion timeline is a different mortgage transaction than buying resale. The financing tool is a progress-draw construction mortgage — funds released in stages as the home is built and inspected. Done right, it is straightforward. Done wrong, it leads to cost overruns, inspection delays, and emergency interim financing at private-lender rates. Here is the 2026 playbook.

Two Different Construction-Financing Paths

1. Progress-draw / completion mortgage with a builder — most production-builder new builds in southwest Edmonton, Beaumont, Sherwood Park, Spruce Grove. The builder carries the construction risk; you take a normal mortgage at completion.
2. True progress-draw construction mortgage — for custom builds where you (the homeowner) are funding construction and need draws released as work is completed.

The second category is what this guide covers.

How Edmonton Progress Draws Work

A progress-draw mortgage funds in 3 to 5 stages based on construction completion. Standard Alberta schedule:

Each draw requires a third-party progress inspection (typically Solidifi, NAS, or AIC-designated appraiser) costing $200-$350 per visit, paid by the borrower.

The Holdback Rule

Alberta's Builders' Lien Act (now Prompt Payment and Construction Lien Act) requires a 10% holdback on every payment to contractors. Lenders apply the same rule:

• 10% of each draw is held back until 45 days after substantial completion
• This protects the lender (and you) from sub-trade lien claims
• Final 10% is released only after a clear title search confirms no liens

If a sub-trade files a lien, the lender freezes the holdback until the lien is resolved — sometimes for 6-12 months.

Interest During Construction

You pay interest only on funds advanced, not on the full mortgage amount.

Example — $620,000 Edmonton custom build, draw schedule above, 6-month build, prime + 0.50% (current ~6.45%):

• Months 1-2 (Draw 1, $217,000 advanced): ~$1,165/month interest
• Months 3-4 (Draw 2 added, $403,500 total): ~$2,170/month interest
• Months 5 (Draw 3 added, $558,000 total): ~$2,995/month interest
• Month 6 (Draw 4, $620,000 total): ~$3,335/month interest

Total interest cost during build: ~$11,000-$14,000. Budget this as a hard cost — it is not optional.

Lender Choice in Edmonton (2026)

Not every lender offers true progress-draw construction:

Strong appetite:

• ATB Financial — local underwriting, strong on custom builds, often the first call in Edmonton
• Servus Credit Union — competitive rates, flexible draws
• RBC — solid program for high-net-worth custom builds
• Scotiabank — flexible STEP-product integration
• Equitable Bank — niche for non-standard builds

Limited or no appetite:

• Most monoline lenders (MCAP, First National) — primarily completion-only
• Online-only lenders

2026 Rates

Construction draws are typically funded at prime + 0.25% to + 1.00% (currently 6.20%-6.95%). At conversion to a permanent mortgage at occupancy, you select a fixed or variable term at then-current rates.

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Down Payment and Land Equity

Standard requirements:

• 20% minimum down payment (insured construction is rare and only via specific CMHC programs)
• Land you already own can count toward the 20% at appraised value (lien check required)
• CMHC-insured construction: available up to 95% LTV but processing is slower and lender pool narrower

Common Edmonton Construction Mortgage Mistakes

1. No fixed-price contract — cost-plus contracts terrify lenders; locked GMP (guaranteed maximum price) contracts are required
2. Builder not on the lender's approved list — many lenders maintain approved-builder lists; non-listed builders need additional vetting
3. Underestimating interest carry — borrowers often forget to budget the $10K-$15K of construction-period interest
4. Missing the appraisal — an "as-complete" appraisal is required at application; the home must appraise to support the mortgage
5. Not budgeting holdback release timing — final 10% release is 45+ days after substantial completion, often after final trade payment is due
6. Liens from disputed sub-trade work — verify the GC pays sub-trades on schedule; one disputed payment can freeze your holdback

Builder New-Builds (Production Builders)

For Brookfield, Cedarglen, Jayman, Sterling, Truman, etc., the financing pattern is simpler:

• Deposit at signing: $5K-$25K
• Builder finances construction internally
• You arrange a regular mortgage that funds at completion (60-180 days from start)
• Rate hold: typically 90-120 days from signing; longer holds (180+ days) available with rate-lock fees

Watch the rate-hold expiry. A 4.39% rate at signing in October that expires before March possession can mean re-pricing at 5.20% — a $250/month payment increase on a $500K mortgage.

Conversion at Occupancy

When the build is substantially complete and final inspection passes:

• The construction loan converts to a permanent mortgage
• You select term (1-10 years) and type (fixed or variable) at current rates
• Property tax assessment and insurance must be in place
• Title search confirms no outstanding liens

A solid Edmonton custom build with a reputable GC, a fixed-price contract, and ATB or Servus on the financing is a smooth process. Skip any one of those three pieces and the project becomes the most expensive mortgage you will ever carry.