The client
A buyer in Ingersoll building a new home under a construction mortgage on a $415,000 as-completed value, at 5% down, on $9,000/month of their own income.
As-completed value
$415,000, Ingersoll
5% down, insured new-build
Commitment letter's Draw 2 date
a calendar estimate
Printed when the mortgage was first approved
Construction contract's Draw 2 trigger
framing complete
The builder's own milestone, reached ahead of the calendar estimate
Draw 2's value
$82,004
20% of the total construction mortgage
The problem
A construction mortgage commitment letter typically lists each draw against an estimated calendar date, worked out when the mortgage is first approved, months before the ground is even broken. The builder's own construction contract, signed separately, usually triggers each draw by a completion milestone instead.
What happened when the two documents disagreed
- ▸The commitment letter estimated Draw 2 -- the framing-completion draw -- for a calendar date worked out at approval, based on a typical building schedule
- ▸The builder's own construction contract triggered Draw 2 on inspection confirming framing complete, whichever date that turned out to be
- ▸An unusually dry, mild stretch of weather let the framing crew finish well ahead of the calendar estimate; the lender's system, keyed to the commitment letter's date, read the resulting draw request as premature and declined to release it
The framing was genuinely, verifiably complete. The only thing not yet complete was the calendar date a commitment letter had estimated months earlier, before anyone knew what the weather would do.
The numbers
The draw amount itself was never in dispute -- only which of two documents actually governed when it released.
| Draw 2, sized against the total construction mortgage | Amount |
|---|---|
| Base mortgage (95% of as-completed value) | $394,250 |
| CMHC premium (4.00% at 90.01-95% LTV) | +$15,770 |
| Total construction mortgage | $410,020 |
| Draw 2 (framing-completion draw, 20%) | $82,004 |
| Ratio check on the completed home | Figure |
|---|---|
| Payment at the qualifying rate (6.85%), 25 years | $2,834/mo |
| GDS (payment + $270 tax + $105 heat) ÷ $9,000 income | 35.7% |
| TDS (GDS numerator + $225 car loan) ÷ $9,000 income | 38.2% |
35.7% and 38.2% sit comfortably inside CMHC's 39% GDS and 44% TDS maximums once the home is complete -- consistent with what housing starts data suggests about how quickly a well-scheduled build can move once framing is done. The ratios were never the obstacle here; the draw's own timing was.
The solution
A mortgage agent licensed under Ontario's Mortgage Brokerages, Lenders and Administrators Act treated the calendar date and the milestone trigger as two documents to reconcile, not two competing versions of the truth.
First, obtained the qualifying inspection confirming framing complete, dated and signed, as the primary evidence the milestone had actually been reached.
Second, reconciled the commitment letter's calendar-date estimate against the construction contract's own milestone triggers in writing, showing the lender's construction-draw team exactly where the two documents diverged and why.
Third, confirmed directly with that team that a qualifying inspection -- not the estimated date -- governs when a draw actually releases, closing off the risk that the same disagreement would recur at the next draw.
The outcome
Draw 2 released against the inspection confirming framing complete, and the completed mortgage funds at 35.7% GDS and 38.2% TDS once the home is finished.
Both ratios sit comfortably inside CMHC's 39% GDS and 44% TDS maximums; the completed home's own math was never in question, only which document controlled the draw's timing.
What to take from this file
- 01A commitment letter's draw dates are scheduling estimates, not binding triggers. The construction contract's own milestone terms usually govern instead.
- 02Good weather can finish a build ahead of a calendar estimate worked out months earlier. A lender's system keyed to that estimate may read an early, earned draw request as premature.
- 03A qualifying inspection confirming the actual milestone is the evidence that resolves the disagreement, not a renegotiation of either document.
- 04Confirm which document governs draw timing before the disagreement recurs at the next draw. One written confirmation from the lender's own construction-draw team settles it for the rest of the build.
Sources
Every regulatory figure in this file traces to one of these primary sources. Client details and anything that varies by lender are illustrative, as flagged below.
- ▸CMHC — Purchase (Mortgage Loan Insurance) — default-insurance premium schedule by LTV band (25-year amortization).
- ▸CMHC — CMHC Home Start — minimum down payment tiers (5%/10%) and the $1.5M insured price cap.
- ▸OSFI — Minimum qualifying rate for uninsured mortgages — the minimum qualifying rate — greater of contract rate + 2% or 5.25%.
- ▸CMHC — CMHC Reviews Underwriting Criteria — GDS 39% / TDS 44% maximums and the 600 credit-score floor for insured files.
- ▸Provincial/territorial mortgage-broker legislation fetched directly (bclaws.gov.bc.ca, legisquebec.gouv.qc.ca, fcaa.gov.sk.ca, web2.gov.mb.ca, nslegislature.ca, assembly.nl.ca) plus FCNB's own site for NB and CanLII's index for PE — see notes for per-province method — provincial mortgage regulators and licence titles.
Illustrative in this file — lender-specific, not rules:
- ▸4.85% contract rate — rates move daily; not a quote.
- ▸the calendar dates printed on a construction commitment letter — these are scheduling estimates, not binding triggers; each lender and builder sets its own draw-release practice.
Authority & provenance
How this case file was built
We publish the origin, the verification method and the reviewer for every case file, so you can judge how far to trust it before you rely on it with a client.
Where it comes from
Derived from files handled by Treadstone’s fulfillment desk and from scenarios contributed by partner brokerages. Names, employers, exact amounts and dates are changed so no client or file is identifiable.
Provenance: Composite — a pattern seen repeatedly on fulfilled files, not a single transaction.
What is verified
Every regulatory figure traces to a primary source listed above and was checked against it on the date shown. The arithmetic is recomputed by machine on every rebuild.
Anything that varies by lender is labelled illustrative rather than stated as a rule.
Who reviewed it
Reviewed for Canadian regulatory accuracy before publication, and re-checked whenever a cited rule changes.
Reviewed by: Nicholas Parson, Treadstone Associates — reviews every case file before publication.
This case file is professional reference material for licensed mortgage professionals. It is not advice to a borrower, and it is not a lender commitment. Insurer rules, qualifying rates and provincial taxes change — confirm the current position with the insurer, regulator or lender before you rely on any figure here in a live file.