Pre-Construction Mortgage Approval

Pre-Construction Mortgage Approval

Have you ever purchased a pre-construction home? If you have, then you know how the financing works, but if you are a first time home buyer and looking at purchasing a pre-construction property, then you will want to read this post about pre-construction mortgage approval.

pre-construction mortgage approval

It is common practice and policy by the builders to ask potential home buyers to get a pre-construction mortgage approval to make sure they can be qualified if they were to buy the property right now, even though pre-construction projects normally take over one year to finish.

So what do first time home buyers do? They go to their Mortgage Broker and ask him or her to qualify them on a pre-construction mortgage approval. This is no different than a regular pre-approval. In fact they’re one and the same.

When you have a pre-construction mortgage approval you are showing the builder that if the home was available to be moved in as of now your mortgage was approved and the builder would get paid.

The cautionary tale here is the fact that pre-construction mortgage approvals a.k.a. have a maximum life span of 120 days after which point they expire and there is no guarantee from the lender they will honor the rate hold or anything else on the mortgage approval.












What typically happens with pre-construction mortgage approvals is that the home buyer will return back to their Mortgage Broker no earlier than four months before the actual and final closing date of their property and apply again for an actual mortgage approval. Because this time around the pre-construction project will have been completed and be ready for transfer of ownership to the purchaser in no more than 120 days.

In this second time of applying for the mortgage the process can be more strenuous as you will need to provide a whole lot of documentation to the lender to satisfy all their conditions of approving your mortgage. Here is a list of items that the lender will ask the applicant to provide; this is just an example:

  • Updated mortgage application
  • New credit check, which the Mortgage Broker will do
  • Proof of income
  • Proof of down payment
  • Copy of the builders final and signed Agreement of Purchase and Sale including all schedules, waivers, amendments and any other documents that comes with the agreement
  • Proof that you have at least 1.5% of the purchase price in your personal accounts to cover closing related costs such as legal fee, appraisal fee …etc.

This is why we always recommend that you consult with your Mortgage Broker and work with her or him closely along the path towards your final closing date and home ownership. We recommend that you also work with a Lawyer and even consider asking a Realtor to go through the builder’s documents for you as they can catch certain things that you may not to be able to better negotiate with the price.

We’re here to answer your questions. Contact Us with any questions you have, or if you would like to start your pre-construction mortgage approval application process.

Harper Government teams up with the Canadian Home Builders' Association to ensure Canadians Get it in Writing!

Harper Government Teams up With Canadian Home Builders Association

Harper Government Teams up With the Canadian Home Builders’ Association

Here is the press release from the Government of Canada dated 5 March 2015 about the Harper Government Teams up With Canadian Home Builders Association to ensure Canadians Get it in Writing!

Harper Government teams up with the Canadian Home Builders' Association to ensure Canadians Get it in Writing!

Harper Government teams up with the Canadian Home Builders’ Association to ensure Canadians Get it in Writing!

The Honourable Kerry-Lynne D. Findlay, P.C., Q.P., M.P., Minister of National Revenue, announced today that the Government of Canada is providing approximately $745,000 over the next three years to support the Canadian Home Builders’ Association’s (CHBA) Get it in Writing! campaign. The campaign helps Canadians and legitimate businesses protect themselves from unscrupulous contractors in the construction industry who are operating through the underground economy. Minister Findlay made the announcement at the CHBA’s National Conference in Halifax, Nova Scotia.

The Get it in Writing! campaign raises awareness about the safety and financial risks the public face if they participate in the underground economy by purchasing construction or home renovation services “under the table.” It provides consumers and home renovation contractors with tools and information to discourage and reduce participation in the underground economy.

The Government of Canada works closely with industry and other levels of government to combat the underground economy in Canada. Minister Findlay launched a three-year Underground Economy Strategy, Reducing Participation in the Underground Economy last fall, and formed an Advisory Committee of industry representatives.

For more information, visit:


Quick facts

  • In 2011, Statistics Canada estimated the value of underground economy activity in Canada at 2.3% of the GDP.
  • In 2013-2014, the CRA audited almost 8,000 cases involving participation in the underground economy, and identified an additional $718 million in unreported income.
  • The CRA’s strategy, Reducing Participation in the Underground Economy, will:
    • promote better understanding of Canada’s underground economy – where, when and how it occurs;
    • reduce the social acceptability of participation in the underground economy; and
    • reduce participation in the underground economy through a range of initiatives over the next three years.
  • On November 17, 2014, the Minister of National Revenue’s Underground Economy Advisory Committee held its first meeting in Toronto, Ontario. The Committee has representatives from academia and key industry associations representing the financial, restaurant, retail, home building, and construction industries, as well as small businesses and chambers of commerce.


“The Canadian Home Builders’ Association is a valuable partner, and a leader among peers in raising awareness about the pitfalls of participating in the underground economy in the construction industry. We are proud to support the Get it in Writing! campaign. It is a clear example of how government and industry can work together to make a genuine difference in the safety and economic health of our communities.”

The Honourable Kerry-Lynne D. Findlay, P.C., Q.C., M.P., Minister of National Revenue

“Participating in the underground economy provides an unfair advantage to unscrupulous businesses, and undermines the competitiveness of the millions of legitimate Canadian entrepreneurs. By simple actions like always getting a receipt, Canadians can do their part and join our Government and industry partners in tackling this pervasive and costly problem.””

The Honourable Kerry-Lynne D. Findlay, P.C., Q.C., M.P., Minister of National Revenue

“Contractors who cut corners when it comes to their taxes are also likely to cut corners in their work. That’s bad news for Canadian consumers. The Canadian Home Builders’ Association urges Canadians to not expose themselves to undue risk, both physical and financial. The Government of Canada’s underground economy strategy is a significant step in fighting the underground economy. We thank the Government of Canada for its renewed support for the Get it in Writing! campaign.””

Kevin Lee, Chief Executive Officer, Canadian Home Builders’ Association

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