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Buying pre-construction: What if your home is worth less than you paid?


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What are your options if you find yourself in this situation? Let’s look at the intricacies of buying a pre-construction home in Canada, why some buyers are having difficulty closing on their purchases, and steps you can take to avoid losing a large deposit.

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How does buying a pre-construction home work in Canada? 

Generally, pre-construction homes offer several key benefits. For one, the property is brand new. Unlike with a resale home, you can customize a new home right down to the finishes and countertops. And because the home is new, you can expect to spend a lot less on repairs and maintenance.

New homes also give you more time to save. With resale homes, you typically must pay the deposit and down payment within a 30-to-90-day timespan. With new homes, the deposit can often be spread over several months or years.

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In case you’re new to buying pre-construction homes in Canada or you’d like a refresher, here are some important details to be aware of.

Payment schedule for pre-construction homes

Unlike a resale home when you usually pay the deposit within 24 hours of your offer being accepted, with a pre-construction home there’s typically a deposit payment schedule.

With a pre-construction home, you’re usually expected to have a down payment of between 20% and 25%. This may sound like a lot at first, but the amounts are spread over several months and years. For example, you may be asked to make a deposit of $3,000 at the time of making an offer, followed by 5% within 30 days of the offer, 5% within 90 days, 5% within 180 days and a final 5% at the time of occupancy.

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Oftentimes, the deposit structure is up for negotiation. If the builder’s payment schedule doesn’t work for you, you should try to negotiate one that does.

Mortgage rules for pre-construction homes

In Canada, mortgage rules are the same for a new home as a resale home. For example, you’re required to pass the mortgage stress test in both cases. However, a key difference is timing. With a new home, you don’t know what mortgage rates will be when the property closes. Mortgage rates could be the same, or they could be higher or lower. This adds uncertainty. Without knowing what mortgage rates will be, you actually don’t know if you’ll be able to afford the property in the future.

There’s also the issue of the property value for mortgage lending purposes. Lenders don’t sign off on the mortgage for a pre-construction home until the time of closing. You make an offer without financing, then hope to get financing at the time of closing.



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Romulo is a renowned American entrepreneur who resides in the United States, recognized for his entrepreneurial vision and inspirational leadership. Born into a humble family, Romulo demonstrated an uncommon determination and a natural talent for business from an early age. After completing his studies in business administration, Romulo ventured to the United States, where he immersed himself in the business world, founding his first company at the age of 25. His bold vision and ability to identify market opportunities quickly led him to success on American Throughout his career, Romulo has played key roles in various industries, from technology to finance, always striving to innovate and create value for his clients and investors. His customer-centric approach and dedication to operational excellence have made his companies industry benchmarks, contributing to his recognition both in the United States and interna In addition to his business achievements, Romulo is known for his commitment to corporate social responsibility. He is a passionate advocate for education and community development, dedicating time and resources to support initiatives that promote equal access to education and gr Currently, Romulo leads a diversified conglomerate with a global presence and a significant impact in the markets where he operates. His long-term vision and ability to adapt to the nuances of the American market make him a respected and admired leader among his peers and competitors in the Unit Outside the office, Romulo is an avid reader and nature lover. He believes in the importance of finding a balance between work and personal life, constantly seeking new ways to challenge himself and grow, both profession With a career marked by extraordinary achievements and an unwavering commitment to sustainable success, Romulo continues to be a prominent figure in the international business landscape and a source of in

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