Ontario Construction Draw Schedule Calculator 2026 | Stage-by-Stage
Ontario Construction Draw Schedule Calculator 2026
See exactly when your construction mortgage draws are released, how much arrives at each stage, what the lender holds back, and what your carrying costs will be while your home is being built.
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How Ontario Construction Mortgage Draws Work
A construction mortgage is fundamentally different from a regular mortgage. Instead of receiving the full amount upfront, funds are released in stages as construction milestones are completed. Before each draw, your lender sends an inspector to verify the work — and holds back a portion until they’re satisfied.
The holdback rule — why you never get 100% at each stage
Ontario’s Construction Act requires lenders to hold back 10% of each draw (previously called a “statutory holdback”) to protect against contractor liens. This holdback is released 45 days after the project’s Certificate of Substantial Performance is published — or after the lien period expires. Your builder cannot demand this holdback early. Budget your cash flow to account for it.
Here’s the typical 5-draw schedule used by most major banks for new home construction in Ontario:
| 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 & exterior doors installed |
| Draw 3 | Rough-in complete | 20% | Plumbing, electrical, 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 — and why it matters
Substantial completion doesn’t mean 100% done. It means the home is ready for occupancy — the major systems work, the building inspector has issued an occupancy permit, and any remaining items are minor touch-ups. Your final draw is released at this stage. Holdbacks from earlier draws are released 45 days after the Certificate of Substantial Performance is published in the Ontario Construction News.
Tarion Holdbacks — The Extra Layer
If your builder is Tarion-registered, lenders apply an additional holdback structure tied to the Tarion warranty enrollment. This protects you (and the lender) against the builder walking away before completion. The Tarion deposit protection also means your deposit is protected up to specific limits — currently $60,000 for freehold homes.
If your builder is not Tarion-registered, you have no deposit protection and no warranty coverage. This is a significant risk — especially on a new custom home where the builder relationship spans 12–18 months and hundreds of thousands of dollars.
Tips for Managing Cash Flow During a Build
- Budget carrying costs as a real expense — not a rounding error. On a $500K mortgage at 6.5%, you’ll pay $16,000–$20,000 in interest during a 12-month build.
- Don’t spend your holdback money — it’s sitting with the lender, not in your account. Builders who budget assuming they’ll have holdback cash available mid-build get into trouble.
- Inspector delays cost money — each inspection delay pushes your draw back, which means your builder may need interim financing. Discuss draw timing with your builder and lender before you start.
- Confirm your lender’s draw schedule early — different lenders use different numbers of draws and different milestone definitions. Align your builder’s payment schedule with your lender’s draw schedule before signing anything.
- Keep a contingency — budget 10–15% on top of the construction cost for overruns, upgrades, and the inevitable “while we’re at it” decisions.
For a complete guide to construction financing in Ontario, see our Construction Financing for Custom Homes Ontario guide, or review how builder allowances work — another area where cash flow surprises hide.
Frequently Asked Questions
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 have been released. At that point, 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. Make sure you’ve arranged your long-term mortgage terms (fixed vs variable, amortization) in advance — ideally before construction starts.
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. This can reduce paperwork and may offer more flexibility than a construction mortgage. The tradeoff 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, construction mortgage, or combination works best for 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 the builder runs short between draws, they may ask you for advance payments against future draws. 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. If a builder can’t float between draws, that’s a sign of financial instability worth investigating before you proceed.
Does the construction mortgage rate lock when I apply?
Typically no — most construction mortgages are variable-rate during the build phase, floating at prime plus a spread. You lock in the long-term mortgage rate at conversion (substantial completion). Some lenders offer rate holds for the permanent mortgage portion — ask specifically about this when shopping lenders. Given that builds take 12–18 months, the rate environment at conversion can be significantly different from when you applied.
Can I act as my own general contractor and still get a construction mortgage?
Some lenders will do this — particularly credit unions and some private lenders — but it’s harder than using a registered builder. Lenders want confidence the project will be completed properly, and an owner-builder arrangement introduces more risk from their perspective. Expect higher scrutiny, potentially a higher rate, and possibly a requirement for a professional project manager or construction consultant. You also won’t have Tarion warranty coverage.
What is the HST situation on a new home purchase in Ontario?
New homes in Ontario are subject to HST (13%). However, if the home is your primary residence, you’re likely eligible for the Ontario New Home HST Rebate, which can recover up to $24,000 of the provincial portion. There’s also a federal GST/HST new housing rebate. The rebate is applied on homes valued up to $450,000 at full value, with a partial rebate above that. See our HST Rebate Calculator for your estimated rebate amount.
📐 Related Calculators & Guides
Construction financing is one piece. These tools cover the rest of what you need to budget before you build.
Builder’s note on construction draws
The draw schedule conversation is one we have with every client before we start — because misaligned expectations about timing and holdbacks are the #1 source of friction between builders and homeowners during a build. The short version: money arrives in stages, the bank holds some back at every stage, and interest accumulates on everything that’s been drawn. Budget for carrying costs. Confirm your lender’s draw milestones match your builder’s payment schedule. And work with a builder who has done this enough times to know how to keep the project cash-flow positive between draws. If you’re building in Simcoe County or Georgian Bay, book a call with our team — we walk every client through this before contracts are signed.