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Ontario Construction Draw Schedule Calculator 2026 | Stage-by-Stage
Ontario construction mortgages
Draw schedule + carrying costs
2026 rules
Ontario Construction Draw Schedule Calculator (2026)
A construction mortgage works nothing like a regular one. The money is released in stages as milestones pass, the lender holds back a slice at every draw until an inspector signs off, and interest quietly accrues on everything drawn to date. Misreading the draw schedule is one of the top causes of cash-flow trouble on a new build. This free calculator shows the real timeline, the stage-by-stage amounts, the holdback, and your carrying costs – before you sign anything.
Stage-by-stage draws
10% holdback
Carrying-cost table
Enter your project details
Full build cost – structure, mechanical, finishes. Excludes land.
Cash or land equity you are contributing – reduces the mortgage.
Construction loans are usually variable – verify with your lender.
From permit issuance to occupancy permit.
Affects the number of draws and milestone structure.
Affects deposit protection and warranty coverage.
Total mortgage amount
–
Construction cost minus down payment
Total carrying costs
–
Estimated interest during the build – budget separately
Total 10% holdback
–
Withheld until the lien period passes after completion
Stage-by-stage draw timeline
Monthly carrying costs during the build
| Build phase | Approx. month | Cumulative drawn | Monthly interest | Cumulative interest |
|---|
Estimates only. Draw percentages, holdback timing, rates, and carrying costs vary by lender and project. Always confirm your specific draw schedule and holdback rules with your lender before finalizing your budget. This is not financial or legal advice.
Want your builder’s payment schedule to line up with your lender’s draws?
Book a call
That mismatch is the number-one source of cash-flow friction on a build. We walk every client through it before contracts are signed. Building in Simcoe County or Georgian Bay? Call 705-533-1633 or book a quick call.
How Ontario construction mortgage draws work
A construction mortgage is fundamentally different from a regular mortgage. Instead of receiving the full amount up front, funds are released in stages as construction milestones are completed. Before each draw, your lender sends an inspector to verify the work, then advances that stage’s money – and holds back a portion until they are satisfied. You pay interest only on what has been advanced, which is why the carrying cost grows as the build progresses.
The holdback rule – why you never get 100% at each stage
Ontario’s Construction Act requires a 10% holdback on the value of the work (the basic holdback). It protects against contractor and subtrade liens. The holdback is not released the moment the house is done – it is held through the lien period. Under the modernized Construction Act, the standard lien preservation period is 60 days (not the old 45 days from the former Construction Lien Act), so plan your cash flow to live without that 10% until well after substantial completion.
New for 2026: Bill 60 amendments in force January 1, 2026 introduce a mandatory annual holdback release, decoupled from lien expiry. On longer or phased projects, the owner must publish a Notice of Annual Release of Holdback (a new prescribed form), and the holdback is paid no earlier than 60 and no later than 74 days after that notice. For a single home built inside a year this mostly means the same thing in practice – your 10% is released after the lien period – but confirm the exact mechanics with your lawyer and lender.
The typical 5-draw schedule (major banks)
Most major banks use a five-draw schedule for a new custom home. Credit unions often use four draws and private or B lenders three – the calculator above adjusts for each. Here is the common bank structure.
| Draw | Stage | Typical % | What the inspector verifies |
|---|---|---|---|
| Draw 1 | Foundation complete | 15% | Footings poured, foundation walls complete, waterproofed, backfilled |
| Draw 2 | Lock-up (framed & weathertight) | 25% | Framing complete, roof on, windows and exterior doors installed |
| Draw 3 | Rough-in complete | 20% | Plumbing, electrical, and HVAC rough-in done, insulation started |
| Draw 4 | Drywall complete | 25% | Drywall hung, taped, primed; mechanicals fully roughed in |
| Draw 5 | Substantial completion | 15% | Home substantially complete, occupancy permit received |
What “substantial completion” means
Substantial completion does not mean 100% done. It means the home is ready to occupy – the major systems work, the building inspector has issued an occupancy permit, and only minor touch-ups remain. Your final draw is released at this stage, and the earlier holdbacks are released after the lien period once the Certificate of Substantial Performance is published in a designated construction publication.
Tarion deposit protection and warranty
If your builder is Tarion-registered, you get deposit protection and warranty coverage that a non-registered builder cannot offer. For a freehold home, Tarion deposit protection now covers up to $60,000 if the purchase price is $600,000 or less, and 10% of the price up to a maximum of $100,000 if it is over $600,000. That protects your deposit if the builder fails to complete.
New notice rule (from April 1, 2026): to qualify for the maximum deposit coverage, a freehold buyer must give Tarion notice of the purchase within 45 days of signing the agreement of purchase and sale. Miss that window and your deposit coverage can be reduced. Do not skip this step.
If your builder is not Tarion-registered, you have no deposit protection and no statutory warranty. On a custom home – a relationship that spans 12 to 18 months and hundreds of thousands of dollars – that is a significant risk worth weighing carefully.
Do not forget the 2026 HST rebate
New homes in Ontario carry 13% HST, but the enhanced 2026 rebate can hand a large chunk of it back. On a qualifying new or owner-built home priced up to $1 million, the rebate can return the full 13% – up to $130,000 – phasing down to zero at $1.5 million. For the enhanced rules, the agreement with a builder must be signed, or owner-built construction must begin, between April 1, 2026 and March 31, 2027, and the home must be your primary residence or a qualifying long-term rental. For that one-year window it is open to all buyers, not just first-timers.
Ignore the old numbers. The former rebate capped around $24,000 and phased out above a $450,000 home value. That is out of date. Estimate your current rebate with the new-home HST rebate calculator, and confirm eligibility with your accountant and current CRA guidance.
Tips for managing cash flow during a build
- Budget carrying costs as a real expense, not a rounding error. On a typical mid-six-figure mortgage over a year, interest during the build can run well into five figures, and it does not reduce your principal.
- Do not spend your holdback money. The 10% is sitting with the lender, not in your account. Builders who assume they can use holdback cash mid-build get into trouble.
- Inspector delays cost money. Each delayed inspection pushes a draw back, which can force your builder into interim financing. Discuss draw timing before you start.
- Confirm your lender’s draw schedule early. Different lenders use different numbers of draws and milestone definitions. Align your builder’s payment schedule with your lender’s draws before signing anything.
- Keep a contingency of 10% to 15% on top of the construction cost for overruns, upgrades, and the inevitable “while we are at it” decisions.
For the full picture, see construction financing for custom homes in Ontario and how builder allowances work – another place cash-flow surprises hide.
Construction mortgage FAQ
When does my construction mortgage convert to a regular mortgage?
Most construction mortgages convert to a standard mortgage at substantial completion, when the occupancy permit is issued and all draws are released. The lender does a final appraisal of the completed home, confirms the loan-to-value ratio, and rolls the balance into a regular amortizing mortgage. Arrange your long-term terms – fixed versus variable and amortization – in advance, ideally before construction starts.
How much does the lender hold back at each draw?
Ontario’s Construction Act requires a 10% basic holdback on the value of the work to protect against contractor and subtrade liens. It is held through the lien period – under the modernized Construction Act the standard preservation period is 60 days, not the old 45 days – and released after that. As of January 1, 2026, Bill 60 also requires mandatory annual holdback release on longer projects. Budget your cash flow so you are not relying on that 10% until well after the home is done.
What is the HST situation on a new home in Ontario?
New homes carry 13% HST, but the enhanced 2026 rebate can return the full 13% – up to $130,000 – on a qualifying new or owner-built home priced up to $1 million, phasing down to zero at $1.5 million. To qualify under the enhanced rules, the agreement with a builder must be signed, or owner-built construction must begin, between April 1, 2026 and March 31, 2027, and the home must be a primary residence or qualifying long-term rental. The old figures of roughly $24,000 and a $450,000 cap are out of date. Confirm with your accountant and current CRA guidance.
Can I use a HELOC instead of a construction mortgage?
Some homeowners who own their lot outright or have significant equity use a HELOC to finance construction. It can mean less paperwork and more flexibility than a construction mortgage. The trade-off is that HELOCs are variable-rate and the available credit limit may not cover a full custom build. Talk to your lender about whether a HELOC, a construction mortgage, or a combination fits your situation.
What happens if the builder runs out of money between draws?
This is a real risk, especially with smaller builders or in high-cost periods. If a builder runs short between draws, they may ask you for an advance against a future draw. Do not do this – it removes your lien-holdback protection and puts you at risk if the builder fails to complete. Stick to the draw schedule. A builder who cannot float between draws is showing you a warning sign worth investigating before you proceed.
Does the construction mortgage rate lock when I apply?
Usually not. Most construction mortgages are variable during the build, floating at prime plus a spread, and you lock the long-term rate at conversion (substantial completion). Some lenders offer a rate hold for the permanent mortgage portion – ask specifically. Because builds take 12 to 18 months, the rate environment at conversion can be quite different from when you applied.
Can I act as my own general contractor and still get a construction mortgage?
Some lenders allow it – particularly credit unions and some private lenders – but it is harder than using a registered builder. Lenders want confidence the project will be completed properly, and an owner-builder arrangement adds risk from their view. Expect higher scrutiny, possibly a higher rate, and sometimes a requirement for a professional project manager. You also will not have Tarion warranty coverage.
Note: this tool and guide provide estimates for planning only. Draw schedules, holdback rules, interest rates, and carrying costs vary by lender, project, and market, and tax and warranty rules are situation-specific. Confirm your specifics with your lender, lawyer, and accountant. This is not financial or legal advice.
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