Construction loan lenders in Canada
Construction lenders finance a build in stages, releasing money as each phase is finished and inspected rather than in one advance. The market ranges from banks and credit unions lending on a single custom home, to alternative and private lenders funding spec builds, infill projects and land.
The construction lenders listed here describe the project types and regions they fund. Which kind of lender fits depends mostly on whether the build is owner-occupied, who is building it, and how much of the budget is already in place.
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A home you will live in, built by a licensed builder on a fixed-price contract, is the file banks and credit unions like best. Owner-builders, spec homes for sale, and multi-unit infill are more often funded by alternative lenders, MICs and private construction lenders, who charge more and move faster.
Larger multi-unit and commercial projects are underwritten on the finished building’s value and income, and sit with commercial and institutional construction lenders rather than residential ones.
How draws and holdbacks work
Each draw is advanced against completed work confirmed by an inspector or appraiser, less the statutory holdback provincial lien law requires. You or your builder fund each stage before it is reimbursed, so the gap between spending and drawing has to be covered from your own money.
Interest is usually charged only on the amount drawn. Ask at the outset how the loan converts to a regular mortgage on completion, and what happens if the build runs over time or budget, that is where construction financing most often goes wrong.
Land loan lenders
Raw land is hard to finance because it produces no income and can be slow to sell. Banks and credit unions lend on it cautiously, with large down payments; private lenders and MICs are more active, at private pricing.
Serviced lots with permits in place are easier to finance than unserviced acreage. If you plan to build, a lender that will fund both the land and the construction is usually simpler than refinancing a land loan into a construction loan later.
Common questions
Which lenders offer construction loans in Canada?
Banks and credit unions for owner-occupied custom homes with a contracted builder; alternative lenders, MICs and private lenders for owner-builders, spec homes and infill; commercial lenders for larger projects. Listings here are self-reported, so check each lender’s registration with the regulator.
Do private construction lenders fund owner-builders?
Some do, where the owner has relevant experience and a realistic budget. Expect closer inspections, a larger equity contribution and private pricing. Banks are less likely to lend to owner-builders at all.
Can I get a loan to buy land in Canada?
Yes, but it takes a larger down payment than a house and fewer lenders offer it. Serviced lots with permits are easiest; raw land is mostly financed by credit unions, private lenders and MICs.
What happens to a construction loan when the build is finished?
It converts to a regular mortgage, either with the same lender or through a refinance to another. Agree the conversion terms before the first draw, because negotiating them after completion leaves you with little leverage.