Construction Mortgage in Quebec — Complete Guide
Understand progressive advance financing, down payment requirements, GST/QST rebates, and the new 30-year amortization rule for first-time buyers. Everything you need to know to finance your new build in Quebec.
Progressive Advance Financing — How It Works
Unlike buying an existing property where the loan is disbursed in a single payment, new construction financing works through progressive advances. The lender releases funds in 5 to 6 installments corresponding to key construction milestones: excavation and foundation, framing, building envelope closure, plumbing and electrical, interior finishes, and final delivery.
At each stage, an inspector appointed by the lender verifies that the work has been completed according to plans before releasing the next advance. During construction, you only pay interest on the amounts already disbursed — there are no principal payments. Full payments (principal + interest) begin only after you occupy the property.
The exact number of advances and percentages released at each stage vary by lender. Typically: foundation (15%), framing (25%), envelope closure (20%), mechanical (15%), finishes (15%), final delivery (10%). Anthony King coordinates these advances with your contractor and the lender to ensure smooth financing.
| Construction Stage | Typical Advance | Total Disbursed |
|---|---|---|
| Foundation | 15% | 15% |
| Framing (structure) | 25% | 40% |
| Building envelope closure | 20% | 60% |
| Plumbing, electrical, mechanical | 15% | 75% |
| Interior finishes | 15% | 90% |
| Final delivery and inspection | 10% | 100% |
Down Payment — Self-Build vs Buying from a Builder
The required down payment varies significantly by construction type. For self-builds (you are your own general contractor), lenders typically require a minimum 20% down payment, as this type of project is considered higher risk. The loan is not insurable by CMHC in this case.
For purchasing a new build from a GCR-certified builder (Garantie de construction residentielle, formerly APCHQ), the loan can be insured by CMHC with as little as 5% down, under the same conditions as an existing home purchase. GCR certification is mandatory in Quebec for all new residential construction and provides protection against defects.
Special case: if you buy land and hire a contractor to build, the down payment is calculated on the total project cost (land + construction). The land must generally be debt-free, or its net value counts as part of the down payment.
Completion Deadline — 12 Months and Implications
Most lenders impose a 12-month completion deadline from the first disbursement. If construction is not completed within this timeframe, the lender may require an extension (with fees) or, in the worst case, call the loan. Some lenders offer extensions of up to 18 months for complex projects.
The interest rate is typically guaranteed (rate hold) for the duration of construction, but this guarantee has a limited duration. If construction exceeds the rate hold period, you may be subject to rates in effect at the time of conversion to a permanent mortgage.
Practical tip: always budget a 10–15% cushion on the budget and 2–3 months on the timeline for the unexpected. Material delays, weather conditions, and mid-project changes are common in Quebec construction projects.
GST/QST Rebate on New Construction
In Canada, GST (5%) and QST (9.975%) apply to new construction, but partial rebates are available. The federal GST new housing rebate allows you to recover up to 36% of the GST paid if the property value is $350,000 or less, with a declining rebate for properties between $350,000 and $450,000.
In Quebec, Revenu Quebec offers a similar QST rebate. The maximum rebate is calculated on a value of $300,000 or less, with a gradual reduction for properties between $300,000 and $500,000. These rebates are subject to strict conditions: the property must be your primary residence and you must be the first occupant.
Example: on a $450,000 construction (excluding land), the GST is $22,500 and the QST is $44,888. Depending on the final value including land, you could recover between $6,000 and $14,000 in combined rebates. Consult Revenu Quebec (revenuquebec.ca) and the Canada Revenue Agency for forms GST190 and VD-370.
| Tax | Rate | Max rebate threshold | Phase-out range |
|---|---|---|---|
| GST (federal) | 5% | $350,000 or less | $350,000 – $450,000 |
| QST (Quebec) | 9.975% | $300,000 or less | $300,000 – $500,000 |
New December 2024 Rule — 30-Year Amortization for New Builds
Since December 15, 2024, first-time buyers purchasing a new build can benefit from a maximum 30-year amortization on a CMHC-insured loan. Previously, the maximum amortization for insured loans was 25 years for all buyers.
This measure reduces monthly payments by approximately 8–10% compared to a 25-year amortization. For example, on a $400,000 loan at 5.00%, the monthly payment drops from $2,326 (25 years) to $2,128 (30 years), a savings of $198 per month. This also improves mortgage qualification, since lower payments result in more favourable debt service ratios.
Conditions: the property must be a new build (never occupied), the buyer must be a first-time buyer (has not owned a property in the last 4 years), and the loan must be insured (down payment less than 20%). Anthony King verifies your eligibility and calculates the exact impact on your purchasing power.
Insured vs Conventional — Which Mortgage for Your Build
If your down payment is less than 20% and you are buying from a GCR-certified builder, your loan will be insured by CMHC, Sagen, or Canada Guaranty. The insurance premium ranges from 2.80% to 4.00% of the loan amount depending on the loan-to-value ratio. This premium is typically added to the loan amount and amortized over the term.
If your down payment is 20% or more (or if you are self-building), your loan will be conventional (uninsured). Rates are generally slightly higher (0.05–0.15% more) but you avoid the mortgage insurance premium. The maximum amortization is 25 years for a conventional loan (unless the 2024 federal budget is modified to extend the 30-year option).
For self-builds specifically, the number of available lenders is more limited. Some specialists such as B2B Trust, CMLS, and certain Desjardins caisses offer dedicated programs. Anthony King identifies the lenders suited to your project type among his 14 partners.
Risks and Mitigation Strategies
The primary risk of new construction is cost overruns. In Quebec, construction costs have increased significantly in recent years due to labour shortages and rising material costs. Budget a reserve of 10–15% of the total budget for the unexpected and extras.
Second risk: delivery delays. A delay can mean additional costs (temporary rent, storage, extra interest on advances). Ensure your contract with the builder includes penalty clauses for delays and a firm delivery date.
For buyers from a builder, Quebec’s Garantie de construction residentielle (GCR) covers workmanship defects (1 year), hidden defects (3 years), and major defects (5 years). For self-builds, this protection does not exist — hence the importance of hiring an independent inspector at each stage.
Anthony King — Your Broker for Construction Financing
New construction financing is one of the most complex mortgage types. It requires tight coordination between the borrower, contractor, lender, inspector, and notary. Anthony King manages this coordination from A to Z, from initial pre-approval to conversion to a permanent mortgage after occupancy.
With access to 14 lenders and specific expertise in new construction, Anthony King finds the best program for your project, whether it is a purchase from plans, a self-build, or a land + construction deal. Free consultation, no obligation.
Frequently Asked Questions
Can I buy the land separately and finance the construction later?
Yes, but the structure varies. Some lenders offer a land loan followed by a construction loan. Others combine both into a single loan. If you already own the land free of debt, its net value can count as part of your down payment. The optimal approach depends on your situation — Anthony King analyzes the options with you.
Is GCR warranty mandatory for all construction in Quebec?
Yes, since 2015, the Garantie de construction residentielle (GCR) warranty is mandatory in Quebec for all new residential buildings of 4 units or less built by a contractor. Self-builders are not covered by GCR. The warranty covers deposits (up to $50,000), workmanship defects (1 year), hidden defects (3 years), and major defects (5 years).
What interest rate applies during the construction phase?
During construction, the rate is typically the lender’s prime rate (variable) or a special fixed construction rate. Interest is calculated only on amounts already disbursed. After occupancy, the loan converts to a permanent mortgage at the rate negotiated during initial approval, subject to the rate hold period (typically 120 days, extendable up to 12 months depending on the lender).
Planning a New Build?
Book a free consultation with Anthony King to structure your construction financing and maximize your tax advantages (GST/QST rebates, 30-year amortization).