13 Jul, 2023
Can I Finance 100% of a Pre-construction Home in Toronto

In the bustling real estate market of Toronto, pre-construction homes have become a popular choice for prospective buyers. These homes, which are purchased before they are built, offer a range of benefits such as customization options and the potential for value appreciation. However, 100% Financing for a pre-construction home can be a complex process, so it’s important to know your options.

When considering a pre-construction home, it’s crucial to evaluate the builder’s reputation. Take the time to research their track record, previous projects, and customer reviews. This information can provide valuable insights into their reliability, craftsmanship, and ability to fulfill their commitments. Moreover, conducting this due diligence ensures that you are partnering with a reputable builder who will complete the project to your satisfaction.

What are Pre-Construction Homes in Toronto?

A pre-construction home refers to a property that is purchased directly from a builder before it is completed. Buyers often secure these homes through a sales agreement or contract, and the actual construction may take several months or even years.

It’s important to consider factors such as:

  • The builder’s reputation
  • Projected completion timelines
  • The potential risks associated with pre-construction purchases
Pre-Construction Homes in Toronto

Financing Options for Pre-Construction Homes

Financing a pre-construction home in Toronto requires careful consideration of the available options. Here are some financing options to explore:

  1. Traditional Mortgage Financing

In Canada, mortgage financing is a common method for purchasing homes, including pre-construction properties. Mortgage lenders evaluate various factors such as the buyer’s creditworthiness, income, and the property’s appraised value to determine loan eligibility.

The Loan-to-Value (LTV) ratio plays a significant role in mortgage financing, indicating the percentage of the property’s value that can be financed. Typically, lenders require a down payment, and the specific amount depends on various factors, including the purchase price and the buyer’s financial profile.

  1. Financing 100% of the Purchase Price

While it is possible to finance the entire purchase price for a pre-construction home in Toronto, it may not be the norm. Lenders often require a down payment, typically ranging from 5% to 20% of the purchase price.

However, the possibility of obtaining 100% Financing may vary based on factors such as:

  • Buyer’s financial situation
  • Credit history
  • Specific policies of lenders
  • Current market value of the property vs. the original purchase price

How much the property appreciates and is worth now determines if brokers can offer 100% financing through their lender partners.

  1. Government Programs and Incentives

The Canadian government provides a number of programs and incentives designed to help homebuyers, including those purchasing pre-construction properties.

Two such programs are the First-Time Home Buyer Incentive and the Home Buyers’ Plan (HBP). The eligibility requirements and specific details of these programs can differ, so it is crucial to conduct thorough research and gain a clear understanding of the options available.

In the case of the First-Time Home Buyer Incentive, the government offers equity ownership of up to 5% or 10% when providing down payment assistance.

  1. Private Lending and Alternative Financing Solutions

In certain cases, private lending and alternative financing solutions can be explored to finance pre-construction homes. Private lenders, such as mortgage investment corporations (MICs), may offer more flexibility in terms of down payment requirements and credit criteria.

However, it’s crucial to carefully assess the terms and interest rates associated with private lending, as they may differ from traditional mortgages. Additionally, alternative financing solutions like joint ventures or bridge loans can be considered depending on individual circumstances.

Working with Mortgage Brokers in Toronto, Ontario

When financing a pre-construction home, working with experienced and reputable mortgage brokers is essential. A knowledgeable mortgage broker can:

  • Guide you through the intricacies of pre-construction financing.
  • Help you explore available options like a Zero Down Payment Mortgage.
  • Ensure compliance with Canadian mortgage regulations.

Conduct thorough research, seek recommendations, and consider factors such as broker reputation, expertise, and customer service when choosing a mortgage broker.


Financing the purchase of a pre-construction home in Toronto requires careful consideration and understanding of the available options. While 100% Financing of the purchase price may not be common, exploring traditional mortgage financing, government programs, and private lending can help you navigate the process.

Remember to consult with mortgage professionals to assess your eligibility, understand the requirements, and choose the best financing solution for your needs.

At Orion Financial, we specialize in pre-construction 100% financing mortgage brokerage and have a team of experienced professionals ready to assist you with your financing needs. Contact us today for expert guidance on financing your pre-construction home in Toronto.

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