Buying a newly constructed home or pre-construction condo in Canada involves a fundamentally different mortgage process than purchasing a resale property — from deposit structures and rate locks to occupancy fees and GST/HST rebates. In 2026, with new builds qualifying for 30-year amortization under insured mortgages, new construction has become an increasingly attractive first-time buyer strategy. Here’s the full guide.
How New Construction Mortgages Differ from Resale
| Factor | New Construction | Resale Property |
|---|---|---|
| Down payment timing | Staged deposits over construction period (5–20%) | Full down payment at closing |
| Mortgage funding | At occupancy or title transfer — often 1–3 years after signing | At closing (30–90 days from offer) |
| Rate lock | Extended rate holds (120–365 days) required; watch lender restrictions | Standard 90–120 day rate hold |
| HST | 13% HST applies — partial rebate available under $450K | No HST on resale homes |
| Amortization | Up to 30 years (insured) as of late 2024 | 25 years max (insured), 30 years uninsured |
The Pre-Construction Deposit Structure
When signing a pre-construction purchase agreement in Ontario, deposits are typically structured in stages:
- 5% at signing
- 5% at 90 days
- 5% at 180 days
- 5% at 365 days (for projects with longer construction timelines)
Total deposits of 15–20% are required before the mortgage funds. Deposits are held in trust by the developer’s lawyer and are typically protected under the Ontario New Home Warranties Plan (Tarion) up to $100,000 per unit.
Rate Lock Strategies for New Construction
With construction closings often 18–36 months after signing, rate certainty is a major concern. Options:
- Extended rate hold: Some lenders offer 12–24 month rate holds for new construction — often with a small premium (0.10%–0.20%) over standard rates.
- Float-down option: Certain lenders allow a one-time rate adjustment downward if rates drop before closing. Confirm this feature is available before committing to a hold.
- Broker advantage: Brokers often have access to lenders with new construction programs not available at retail banks — including more flexible occupancy/closing timelines.
GST/HST New Housing Rebate in 2026
New homes are subject to 13% HST in Ontario. The federal new housing rebate returns 36% of the 5% GST portion on homes under $350,000, phasing to zero at $450,000. The Ontario provincial new housing rebate returns 75% of the provincial HST portion up to $24,000. Most developers factor this into the purchase price — but confirm with your builder whether the listed price includes or excludes HST.
Get pre-approved for new construction financing and compare extended rate holds at mrates.ca.