The client
A dual-income couple building on land they already owned, free and clear, in Salmon Arm, part of a BC Interior market where residential construction investment has stayed active through recent rate cycles. Rather than a cash down payment, the land’s appraised equity stood in for it, with the lender releasing draws only against completed, inspected stages of construction.
Borrowers
Dual-income couple, salaried
Combined income $9,400/month
Land
$145,000 owned equity, free and clear
Substituted for a cash down payment
Construction budget
$410,000 financed via progress draws
Released stage by stage against inspections
As-complete appraisal
$555,000
Land plus completed construction
Property carrying costs
Property tax $260/mo; heat estimate $170/mo
Lender-standard figures
Other debt
One auto loan at $410/mo
Current
The problem
Draws that release only against inspected, completed stages are the lender’s own protection against paying for work not yet done — and they are also where a self-build most often stalls. If a stage inspection fails or is delayed, the draw does not release, and where mortgage deals actually die, stage by stage is rarely at the appraisal or the rate; it is at exactly this kind of sequencing gap.
The couple’s equity in the land was real, but only useful to the file if the appraiser credited it at a value the lender’s loan-to-value math actually needed — which meant getting the as-complete appraisal right mattered as much as the construction itself.
The numbers
Four stages, four inspections, four draws — each sized as a percentage of the $410,000 construction mortgage.
| The draw schedule | Amount |
|---|---|
| Excavation/foundation draw (15%) | $61,500 |
| Framing/lock-up draw (25%) | $102,500 |
| Drywall/interior draw (25%) | $102,500 |
| Final-completion draw (35%) | $143,500 |
| Total construction financed | $410,000 |
$410,000 against the $555,000 as-complete appraisal — land plus completed construction — is 73.9% loan-to-value, comfortably inside conventional lending limits without any cash down beyond the land itself.
Qualifying the completed construction-to-term mortgage
| Rate & payments | Figure |
|---|---|
| Contract rate (illustrative, not a quote) | 5.69% |
| Minimum qualifying rate — greater of contract + 2% and 5.25% | 7.69% |
| Monthly payment at the qualifying rate | $3,048 |
| Monthly payment at the contract rate | $2,548 |
| GDS / TDS | Monthly |
|---|---|
| Payment at the qualifying rate | $3,048 |
| Property tax | $260 |
| Heat | $170 |
| GDS: $3,478 ÷ $9,400 → 37.0% | ✓ |
| Auto loan | $410 |
| TDS: $3,888 ÷ $9,400 → 41.4% | ✓ |
The solution
A BCFSA-licensed submortgage broker sequenced the four inspections directly against the lender’s field appraiser’s calendar, rather than leaving the timing to chance between the couple’s trades and the lender’s process.
Understanding how progress advances actually get released meant no trade started a new stage before the prior draw had actually funded — the discipline that kept the build from ever stalling on a sequencing gap rather than a construction problem.
The outcome
Completed and converted: all four draws released on schedule, the construction mortgage rolled into a term mortgage at 73.9% loan-to-value, 25-year amortization.
No title transfer occurred on this file — the land was already owned — so no provincial property transfer tax applied.
What to take from this file
- 01Owned land equity is a legitimate substitute for cash down, but only if the appraiser credits it at the value the lender’s math needs.
- 02Never let a trade start a stage before its draw has actually funded. A stalled inspection stalls the whole build behind it.
- 03As-complete value carries the loan-to-value math on a self-build, not the land value alone — get the appraisal that reflects both.
- 04Four stages means four chances for a delay. Build the timeline with slack, not against it.
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.
- ▸OSFI — Minimum qualifying rate for uninsured mortgages — the minimum qualifying rate — greater of contract rate + 2% or 5.25%.
- ▸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:
- ▸5.69% contract rate — rates move daily; not a quote.
- ▸the four-stage draw schedule and its percentages — each lender publishes its own draw schedule and inspection triggers.
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.