Home Improvement / New Construction

Progress Draw Advantage™

The Progress Draw Advantage program is designed to assist borrowers who are constructing a new home or making major renovations to an existing property. Both contractor-built and self-built projects are eligible under the insured Progress Draw Advantage program.

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Transaction Types

• Purchase transactions.
• Portable eligible.

NOTE: Builder loans are not eligible.

Amortization

• Maximum 25 years; or
• Maximum 30-year amortization for owner-occupied homes if LTV > 80% and the borrower is either: (i) a first-time homebuyer or (ii) purchasing a newly constructed home.

Credit Score Requirements

• Strong credit profile required.

Loan-to-Value Criteria

• Maximum 95% LTV for Purchase: 1-2 units
  • Purchase Price ≤ $500,000: Minimum 5% down payment required.
  • Purchase Price > $500,000: Minimum 5% down payment required on the first $500,000 of the purchase price, plus an additional 10% down payment required on the portion of the purchase price above $500,000.
• Maximum 90% LTV for Purchase: 3-4 units

NOTE: Maximum LTV is subject to adjustments based on local housing market conditions.

Interest Rate Types

• Fixed, standard variable, capped variable and adjustable rate mortgages permitted.
• Borrower(s) must qualify at an interest rate that is the greater of the contract mortgage rate plus 2%, or 5.25%.

Property Types

• Maximum property value must be less than:
  • $1,000,000 if LTV < 80%; or
  • $1,500,000 if LTV > 80%.
• Maximum 4 units with 1 unit owner-occupied.
• Single-family detached and semi-detached homes.

Contractor-Built Criteria

• Title to land must be in borrower’s name on or before closing.
• Contractor and home are registered with an approved New Home Warranty program.

Self-Built Criteria

• When the borrower acts as their own general contractor, individual contracts with sub-trades must each be less than 50% of total construction cost.

Borrower Qualifications

• Down payment is from borrower’s own resources, gifted from a close family member, or borrowed from any source that is arm’s length to the purchase or sale transaction. If borrowed, loan payments must be included in the TDS calculation.
• Rental income from legal unit(s) being constructed under the Progress Draw Advantage™ program may be added to the borrower’s gross annual income for debt servicing purposes and must be confirmed by a fair market rent assessment from an accredited appraiser approved by Canada Guaranty.
• No third-party or non-occupying guarantors.
• Maximum debt service ratios: GDS 39% / TDS 44%

Basic Service (Lender Managed)

• Lender orders appraisal from Canada Guaranty’s approved appraiser list.
• Lender orders inspections and authorizes draws according to established lender policy.

Full Service (Insurer Managed)

• Canada Guaranty orders appraisal from approved appraiser list.
• Canada Guaranty orders all inspections and authorizes required draws.
• Canada Guaranty will pay for up to 4 progress advance inspections.

Documentation Requirements

• Title to land must be in borrower’s name on or before closing.
• Lender obtains plans, cost estimates, building contracts, and permits.
• Lender reviews construction cash flow requirements against draw schedule and addresses shortfalls.
• Lender is responsible for managing holdbacks.

Applicable Premiums

NOTE: Mortgage insurance premiums are non-refundable.

Last Updated: 12/2024