Custom Home Building Financing
Our guide to financing the construction of a custom home
Ready to build your dream home?
Ready to build your dream home?
Here's what you need to know about custom home financing.
If you are building your own home in Greater Vancouver, the Fraser Valley or the Interior, or you're having a contractor build one for you, you know how complicated the process can be.
Going through the mortgage process for a new construction home shouldn't be as complicated. There are now a variety of financing options available for newly constructed and custom-built homes.
Finding you the best way to finance your custom home build.
Finding you the best way to finance your custom home build.
Construction financing falls under one of three categories; purchasing a home that has been newly constructed, constructing your new home yourself and hiring a contractor to build your home.
At the Silverman Mortgage Group, our team of mortgage experts will give you all the information you need to choose the right financing products for your custom home build. We'll walk you through all of the options and help you pick the best one for your unique needs.
Click here to get started
or for more information, review our guide to B.C. custom home financing below.
Custom Home Building Guide
Jordan de Brouwer
"I had a great experience with them. I was a first time home buyer and didn't know much about the mortgage application experience. They made the whole process very easy and stress free and explained each step in detail. I would recommend them to anyone looking for a mortgage, especially first time home buyers."
Leah Allen
"We purchased a second property and Silverman Mortgage Group made the process so easy and quick. I especially liked the personalized video presentation which made it possible for us to clearly understand the process. At a very busy time in our lives almost everything was completed in the comfort of our home."
Reid Arkinstall
"My wife and I had a great experience working with the Silverman Mortgage Group. It took us a while to find the right home but Zach and his team worked with us throughout the entire process, ensuring we always had the most up-to-date mortgage information. We look forward to working with SMG in the future."
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Our team of all licensed experts is available to help you with your custom home build
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One of the benefits of working with an independent mortgage professional is having lots of great financing options! Rather than dealing with a single lender with one set of products, independent mortgage professionals work with multiple lenders who offer a wide selection of mortgage financing options that provide more choice. Increased choice in mortgage products is beneficial when your situation isn’t “normal,” or you don’t quite fit the profile of a standard buyer. Purchasing a new construction home through an assignment contract would be a great example of this. Purchasing a new construction home through an assignment contract can be tricky as not every lender wants the added perceived risk of dealing with this type of transaction. Most of these lenders won’t come out and say it; instead, they add a significant list of qualifying conditions to make the process harder. The good news is, there are lenders available exclusively through the broker channel that have favourable policies for assignment purchases. Here are some of the highlights: All standard purchase qualifications apply, including applicable income verification, established credit, and required downpayment Assignments can be at the original purchase price or current market value Minimum 620 beacon score with no previous bankruptcies or consumer proposals The full downpayment must come from the purchaser and not include any incentives from the seller. As far as documentation goes, the lender will want to see the original purchase agreement signed by all parties, the MLS listing, the assignment agreement signed by the builder, the original purchaser, and the new buyer. The lender will also want to see the side agreement between the original purchaser and the new buyer, including the amended purchase price. The lender will want to substantiate the value through a full appraisal. Now, as every situation is different, this list of conditions is in no way exhaustive but meant to show that assigning a new construction purchase contract is doable while highlighting some of the terms necessary to secure financing. If you’re looking to purchase new construction through an assignment contract, or if you’d like to discuss purchasing a home through traditional means, please connect anytime! It would be a pleasure to outline the mortgage products on the market that won’t limit your financing options!
Building your dream home can sound really exciting, but have you thought about everything that goes into building a new home? Here are 7 Questions you should ask yourself before making any concrete plans! 1. What are my expectations with this new home? Are you looking for a custom home build where you are responsible for every single decision made or do you want to choose an existing floor plan and build a house that is almost entirely predetermined for you? Or maybe you are looking for a mix of both? Regardless... Every home builder has a unique approach to building. Make sure your level of involvement is crystal clear from the start! 2. How familiar am I with the local builders and the homes they build? Although there are standards for how your home will be built (code), there are no standards for pricing. Each builder will quote prices using different specifications for the different homes they build. If one builder is coming in with a estimated build price that is considerable less than another builder, you should dig deeper into the quality of materials being used. Is the flooring hardwood and tile or carpet and lino? Am I getting the basic white appliance package or stainless steel (or are appliances even included?). Knowing your local builders and the homes they build will let you compare apples to apples and ensure you get the best home! 3. Do I have any specific needs or features I want included? If you are looking to add a feature to your home to meet a specific need, make sure your builder has previous experience building in this area. Practical features like wheelchair accessibility or a separate basement suite should be considered as well as lifestyle features like a backyard pool or a below the kitchen wine cellar. Always consider experience when choosing a builder and don't be afraid to ask for references!
As property prices continue to rise across Canada, the conversation around "how to climb the property ladder" has made a subtle shift to "how to get on the property ladder in the first place." Especially if you're single. Whereas before it was assumed anyone would qualify to buy a starter home (or condo), nowadays with increased housing prices and the government making it tougher to qualify for a mortgage through a financial stress test, becoming a homeowner isn't a walk in the park. Qualifying for a mortgage on a single income is becoming increasingly difficult. Unfortunately, just because you have a proven ability to pay rent on time doesn't mean you will qualify to make mortgage payments in the same amount. So if you are looking to get into the housing market, but don't qualify on your own, maybe you should consider co-ownership as an option! So what is co-ownership anyway? Well, co-ownership is when more than one applicant takes on the financial responsibility of owning a property together. Co-ownership can take on many forms. Obviously owning a home with your spouse or life partner is the most common form of co-ownership, while having your parents co-sign on a mortgage is another. But for the sake of this article, let's think past these arrangements. Did you know that there are really no limitations with whom you can purchase a property? This is assuming they meet the lending criteria. Maybe a brother, sister, cousin, neighbour, co-worker, friend, your mechanic, financial advisor, or some distant relative just happens to be looking to get into the housing market as well? There is a good chance that by combining your incomes together, you will qualify for a mortgage that neither of you would qualify on your own. Bringing someone else into the picture, or even a group of people, can significantly increase the amount you qualify to borrow on a mortgage. Most lenders will accept up to four applicants on a mortgage, while some lenders have even gone as far as launching products designed to make buying with friends and family easier. Buying a property with someone(s) in a co-ownership arrangement is becoming way more commonplace. However, before making the decision to buy a house with someone, there is no doubt going to be a list of things you are going to want to work through. You will want to get everything out in the open and ask yourself questions like... Do I trust this person? Can I live with this person? Am I comfortable making decisions about the home with this person? How will conflict be managed when it arises? What happens if either party runs into financial trouble? What is the exit plan? The more you work through ahead of time, the better chance you have at successfully co-owning a house with someone. A lot of people who purchase a property in a co-ownership agreement treat it like a business arrangement. If you'd like to talk more about what this would look like for you personally, please don't hesitate to contact us anytime. We can walk you through the process step by step and get you (and your partner in real estate) the best mortgage available to you!
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When looking to qualify for a mortgage, typically, a lender will want to review four areas of your mortgage application: income, credit, downpayment/equity and the property itself. Assuming you have a great job, excellent credit, and sufficient money in the bank to qualify for a mortgage, if the property you’re looking to purchase isn’t in good condition, if you don't have a plan, you might get some pushback from the lender. The property matters to the lender because they hold it as collateral if you default on your mortgage. As such, you can expect that a lender will make every effort to ensure that any property they finance is in good repair. Because in the rare case that you happen to default on your mortgage, they want to know that if they have to repossess, they can sell the property quickly and recoup their money. So when assessing the property as part of any mortgage transaction, an appraisal is always required to establish value. If your mortgage requires default mortgage insurance through CMHC, Sagen (formerly Genworth), or Canada Guaranty, they’ll likely use an automated system to appraise the property where the assessment happens online. A physical appraisal is required for conventional mortgage applications, which means an appraiser will assess the property on-site. So why is this important to know? Well, because even if you have a great job, excellent credit, and money in the bank, you shouldn’t assume that you’ll be guaranteed mortgage financing. A preapproval can only take you so far. Once the mortgage process has started, the lender will always assess the property you’re looking to purchase. Understanding this ahead of time prevents misunderstandings and will bring clarity to the mortgage process. Practically applied, if you’re attempting to buy a property in a hot housing market and you go in with an offer without a condition of financing, once the appraisal is complete, if the lender isn’t satisfied with the state or value of the property, you could lose your deposit. Now, what happens if you’d like to purchase a property that isn’t in the best condition? Being proactive includes knowing that there is a purchase plus improvements program that can allow you to buy a property and include some of the cost of the renovations in the mortgage. It’s not as simple as just increasing the mortgage amount and then getting the work done, there’s a process to follow, but it’s very doable. So if you have any questions about financing your next property or potentially using a purchase plus improvements to buy a property that needs a little work, please connect anytime. It would be a pleasure to walk you through the process.
Chances are if the title of this article piqued your interest enough to get you here, your family is probably growing. Congratulations! If you’ve thought now is the time to find a new property to accommodate your growing family, but you’re unsure how your parental leave will impact your ability to get a mortgage, you’ve come to the right place! Here’s how it works. When you work with an independent mortgage professional, it won’t be a problem to qualify your income on a mortgage application while on parental leave, as long as you have documentation proving that you have guaranteed employment when you return to work. A word of caution, if you walk into your local bank to look for a mortgage and you disclose that you’re currently collecting parental leave, there’s a chance they’ll only allow you to use that income to qualify. This reduction in income isn’t ideal because at 55% of your previous income up to $595/week, you won’t be eligible to borrow as much, limiting your options. The advantage of working with an independent mortgage professional is choice. You have a choice between lenders and mortgage products, including lenders who use 100% of your return-to-work income. To qualify, you’ll need an employment letter from your current employer that states the following: Your employer’s name preferably on the company letterhead Your position Your initial start date to ensure you’ve passed any probationary period Your scheduled return to work date Your guaranteed salary For a lender to feel confident about your ability to cover your mortgage payments, they want to see that you have a position waiting for you once your parental leave is over. You might also be required to provide a history of your income for the past couple of years, but that is typical of mortgage financing. Whether you intend to return to work after your parental leave is over or not, once the mortgage is in place, what you decide to do is entirely up to you. Mortgage qualification requires only that you have a position waiting for you. If you have any questions about this or anything else mortgage-related, please connect anytime. It would be a pleasure to work with you.