Office 289-505-0631  ·  Direct 647-291-7116 Rajiv Verma, Mortgage Broker · Mortgage Architects · FSRA Licence #12728

First-Time Buyer Mortgage Planning Guide › Chapter 10

I’m buying from a builder.

By Rajiv Verma, Mortgage Broker · Mortgage Architects, FSRA Brokerage Licence #12728 · Updated November 3, 2026

Short answer: buying new or pre-construction comes with mortgage risks a resale buyer never faces. Your approval can expire before closing, the home can appraise below your price, and your builder’s agreement may contain a financing clause that decides whether your deal can close. Plan for all three before you sign.

Will my pre-approval last until closing?

A pre-approval usually lasts 90 to 120 days. A pre-construction home can close two to four years later. What counts is your income, credit and debts at closing. While you wait: don’t change jobs without talking to me, don’t take on new debt, and don’t co-sign for anyone.

I bought a builder home two years ago. What if I don’t qualify now? →

What if the home appraises below my price?

The lender lends on the appraised value, not the price you agreed to. If an $800,000 home appraises at $760,000, your mortgage is based on $760,000. With minimum down, your total cash needed rises from about $55,000 to about $91,000, plus closing costs. Keep a buffer.

Who should review my builder agreement?

Your Realtor helps you find and buy the home. Reviewing the legal terms of your contract isn’t their role, and many buyers find out too late that nobody walked them through the financing clause. Have your real estate lawyer review it, and call me so we can check that clause against your approval. New condo buyers in Ontario get a 10-day cooling-off period; use it. Freehold builder homes don’t have one.

Clauses that affect your mortgage:

  • Financing clause. Some agreements require a firm approval from a major bank or “institutional lender.”
  • Development charges and adjustments. Without a cap, these can add thousands at closing.
  • Assignment rights. Whether you can sell the contract before closing.
  • Closing extensions. How long the builder can delay.

A call I got recently. A buyer signed directly with a builder, without a lawyer reviewing the agreement. It required a firm approval from a major bank before closing. He only qualified with an alternative lender. Before occupancy, the builder asked for that bank approval. He couldn’t provide it, his deal came close to collapsing, and he paid a large penalty because of a clause he never knew he’d agreed to. One lawyer review and one call with a broker before signing would have caught it. (Some details changed for privacy.)

What rebates can I get on a new home?

  • Federal first-time buyer GST rebate: removes the 5% GST on a new home up to $1 million (up to $50,000), with partial relief up to $1.5 million.
  • Ontario first-time buyer HST rebate: up to $80,000 of the 8% provincial portion, following the federal eligibility rules.
  • Ontario enhanced new housing rebate (all buyers, not just first-time): for agreements signed between April 1, 2026 and March 31, 2027, up to $130,000 in total (up to $80,000 of the provincial portion plus up to $50,000 toward the federal portion), with full relief up to $1.5 million, reducing up to $1.85 million. It’s now law, and builders can credit it at closing.

These overlap; they don’t add together. For most eligible buyers, the combined maximum is $130,000. Rules on price, agreement dates, primary residence and who qualifies are strict. Confirm your eligibility with your lawyer before you sign.

What extra costs do new-home buyers pay?

  • HST adjustments in the closing statement
  • Development charge and levy adjustments
  • Tarion enrolment and utility hookup charges
  • Condo occupancy fees: if you move in before the building is registered, you pay the builder monthly occupancy fees (interest, estimated taxes and condo fees) that don’t reduce your mortgage

Frequently asked questions

Do I need a mortgage approval when I sign a pre-construction agreement?
Not a full approval, but you should know your financing options and what your agreement requires before you sign.

What happens if my income drops before closing?
Your approval is based on your situation at closing. Talk to me early so we can plan.

Can I get the GST and HST rebates on a pre-construction home?
Often yes, if you meet the price, date and residence rules. Your lawyer confirms eligibility.

The builder deposit is paid. What else do I need before closing? →

Next up · Chapter 11I’ve found the house. Now what?Continue reading →

Questions about your situation?

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Need a Realtor or a real estate lawyer? I can refer you to people I work with. Ask me during your Coffee Chat.

Rajiv Verma, Mortgage Broker · Mortgage Architects, FSRA Brokerage Licence #12728 · 15 Gateway Blvd, Unit 201, Brampton, Ontario · Office 289.505.0631 · Direct 647.291.7116
This guide is general education, not personal financial, legal or tax advice. Rates shown are examples as of November 3, 2026, for comparison only, and are not a quote or a commitment to lend. Your rate and approval depend on your application, credit, income, property and lender guidelines. Program rules can change.