Introduction
Whether you're developing single-family homes, multi-unit projects, or building your own dream home, understanding your financing options is critical in British Columbia’s real estate market.
1. Financing for Residential Developers
For builders planning single-family homes or a small number of units:
- Completion Mortgages: Funds released at the end of the build, commonly used with bank lenders.
- Draw Mortgages: Funds released in stages (land, foundation, framing, lock-up, etc.).
- Typical Requirements: Permits, plans, fixed-price contract, appraisal, and proof of own equity.
Major Bank Rates: Prime + 2% to 3% (as of May 2025), typically variable.
2. Multi-Family Project Financing
For townhouses, duplexes, and small condo projects:
- CMHC MLI Select (for rentals): Up to 95% LTV if sustainability criteria are met.
- Bridge Loans: Temporary financing during rezoning, permitting, or servicing stages.
- Equity Requirements: Typically 25%-35% equity or presales.
- Private Construction Loans: For fast closings or unusual projects. Rates start around 8%-12% depending on risk.
3. Owner-Builder or Self-Build Loans
If you're building your own home under the Owner Builder Authorization in BC:
- Banks: Require 20%-35% down, fixed-price contracts (some allow cost-plus), and full documentation.
- Credit Unions: More flexible, may work with progressive draws based on invoices.
- Private Lenders: Ideal for those without strong income or credit. Rates start around 9%-14% with fees.
4. Cost Breakdown and Appraisal
Construction financing is based on the “as-completed value.” Lenders will order an appraisal that includes land value + cost-to-build and compare that to your submitted budget.
Example: If land value = $400,000 and build = $600,000, then as-completed = $1M. Most lenders will lend up to 75%-80% of that.
5. Required Documents
- Building plans & permits
- Budget with cost breakdown
- Fixed-price contract or invoices (if draws)
- Appraisal (with “as completed” value)
- Proof of equity (bank statement)
- Builder license or Owner Builder Authorization
6. Common Challenges
- Delays in permitting or draws
- Cost overruns – budget buffers are essential
- Getting approved without employment income (private may help)
- Appraisal coming short – reducing loan amount