The client
A couple building a $465,000 new home in North Battleford, 10% down, with a construction mortgage releasing funds in stages as the build progressed rather than all at once at closing.
As-complete contract value
$465,000
North Battleford new-build
Down payment
$46,500 (10%)
Confirmed before the first draw
Combined income
$9,800 / month
Both salaried
Other debt
Car loan $320/mo
Unchanged through the build
The stage that stalled
Lock-up (framing, roof, windows)
Second of four scheduled draws
The problem
A draw mortgage doesn't advance the full amount at closing — the lender releases money in stages, each tied to a specific point of completion, and each stage is confirmed by an inspection before the next cheque goes out. The builder's contract quoted a fixed price for reaching lock-up; the lender's own inspector, pricing that same stage against the $465,000 as-complete appraisal rather than the invoice, valued it lower.
Invoice vs. inspection at the lock-up stage
- ▸The builder's contract scheduled the lock-up draw at a fixed dollar figure, tied to reaching that point in the build
- ▸The lender's progress inspection assessed the stage as a percentage of the as-complete value, not the invoice amount
- ▸The two numbers did not match, and the lender will only release what its own inspection supports — not the builder's invoice on its own
The gap had to be covered before the builder would keep moving, and the next draw request — due once drywall was in — was only weeks away.
The numbers
The mortgage math itself was never in question; the draw schedule's timing was. Once the borrowers understood how the lender's inspection-based sizing worked, they could plan every later draw around it instead of around the builder's own stage pricing.
| The insured new-build | Amount |
|---|---|
| As-complete contract value | $465,000 |
| Down payment (10%) | −$46,500 |
| Base mortgage | $418,500 |
| CMHC premium — 3.10% in the 85.01–90% LTV band, capitalized | +$12,974 |
| Total insured mortgage | $431,474 |
| Ratio check at the qualifying rate | Figure |
|---|---|
| Minimum qualifying rate on a 4.89% contract rate | 6.89% |
| Payment at the qualifying rate, 25 years | $2,993 |
| GDS (payment + $310 tax + $140 heat) ÷ $9,800 income | 35.1% |
| TDS (GDS numerator + $320 car loan) ÷ $9,800 income | 38.4% |
35.1% and 38.4% sit well inside CMHC's 39% GDS and 44% TDS maximums — the mortgage itself was never the problem on this file. Saskatchewan charges 6% PST on the $12,974 default-insurance premium, adding $778 at closing.
The solution
A mortgage broker licensed under Saskatchewan's FCAA treated the draw shortfall as a scheduling problem to get ahead of, not a sign the file itself was in trouble.
First, confirmed the lender's inspection would size every remaining draw against the as-complete appraisal, not the builder's stage invoices. How progress advances actually get released was the piece the borrowers hadn't been told when they signed the build contract.
Second, had the borrowers cover the lock-up-stage gap from savings so the builder was paid in full and the schedule didn't slip, rather than trying to renegotiate the draw amount mid-build.
Third, walked every later stage with the builder and the lender's inspector together before the draw request went in, so each later invoice was sized to what the inspection would actually support.
The outcome
The lock-up-stage gap was covered from savings, every later draw funded on the first request once the borrowers were pricing them against the as-complete inspection instead of the builder's schedule, and the mortgage funded with GDS at 35.1% and TDS at 38.4%, both comfortably inside CMHC's maximums.
The construction holdback on the final draw is a separate protection again — it exists to cover subtrades' lien rights after substantial completion, on top of the inspection-based sizing that caused this file's mid-build gap.
What to take from this file
- 01A lender's progress inspection prices each draw against the as-complete appraisal, not the builder's invoice. Assume the two will differ until proven otherwise.
- 02Get ahead of the gap, not behind it. Covering a shortfall from savings before the builder is short-paid keeps the whole schedule from slipping.
- 03Walk each stage with both the builder and the inspector before the draw request goes in. It turns a recurring surprise into a known number.
- 04The construction holdback and the inspection-based draw sizing are two different protections. One covers lien risk at the end; the other governs every draw along the way.
- 05The mortgage math and the draw mechanics are separate risks on a build file. This one passed easily on GDS/TDS and still needed active management to keep the build moving.
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.
- ▸Government of Saskatchewan, Ministry of Finance — Information Bulletin PST-73, "Information for Vendors of Insurance Contracts" (Issued May 31, 2017) — 6% Saskatchewan PST on default-insurance premiums.
- ▸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:
- ▸4.89% contract rate — rates move daily; not a quote.
- ▸the lock-up-stage invoice and inspection-supported draw amounts — a lender-specific progress-inspection outcome, not a published schedule.
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.