October 23, 2020 Mathieu Laliberte

Answered – Can you get a mortgage to buy land in Canada?


Questions surrounding mortgages for self-build properties and new constructions are becoming more popular lately as more families look to get involved in the building and design process of their eventual homes. Questions regarding accessibility to mortgages and financing, whether it’s to purchase land, build a new home, or acquire a custom model built specifically for your family’s needs.

Our team collaborated with mortgage specialist Amy St-Pierre to gather some information and details about these types of mortgages, and whether or not you can qualify for one. 

Amy is a mortgage specialist with over five years of experience in the residential mortgage industry. Well-versed in the ins and outs of personal mortgages, she is proud to work with one of Canada’s top lenders. 

If anything is still unclear after this article, we’ll add Amy’s contact information at the end of the post so you can get in touch with her and learn more about your prospective mortgage. 


Financing land in Canada

The fact is that land can be a great investment, and unless you are fortunate enough to have a couple of hundred thousand in your bank account lined up for your purchase, you will most likely be looking for a loan once you find the deal you’ve been seeking.

Ultimately, the financing of land will depend on what you plan to do with it. 

What is your goal?

Is it to hold the land as an asset for a period of time and re-sell it to take advantage of the appreciation in its value? Or are you buying the land as a first step to building your dream home? And if so, in how long do you plan to complete the building process? And how is the construction process going to play out?


Financing an undeveloped lot in Canada

If you are planning on buying an undeveloped lot, in other words, an empty piece of land, and you do not plan on completing the construction of a property in the near or foreseeable future, you may very well still qualify for financing. So what are your options?

Some lenders – usually the big banks – will finance the land with a 50% down payment. So you only have to come up with half of the land’s value from your savings and investments, the other half can be financed. However, usually, these types of financings are in the form of a personal loan rather than a mortgage. Be vigilant because personal loans generally have a much higher interest rate compared to mortgage loans.

Other lenders – usually credit unions – will offer a mortgage loan for a land purchase, in which case the down payment required would be only that of 20%. This could be a better deal since the upfront costs are lower than the previous option (less down payment) and the interest rates are usually significantly lower when the financing is done in the form of a mortgage rather than a personal loan. 


Financing for a pre-construction in Canada

A pre-construction is when a builder sells a property – usually within a project – before the construction is done, or in some cases before the construction even begins. When you buy a pre-construction, you are basically buying a property on plan.

In some cases, the land comes included within the construction project or it can be bought separately. In both cases a mortgage loan would be possible and the minimum down payment details as follows:


  • If the total price (land + construction) is under $500,000, and the property is used as a principal or secondary residence, the minimum down payment is 5% of the total price.
  • If the total price (land + construction) is between $500,000 and $999,999, and the property is used as a principal or secondary residence, the minimum down payment is 5% of the first chunk of $500,000 and 10% for any amount over.
  • If the property is used as an investment property, or if the total price (land + construction) is $1,000,000 or more, the minimum down payment is 20% of the total price.


Financing a self-construction in Canada

The difference between a pre-construction and a self-construction is simple. A pre-construction is when the building process is done through one builder or constructor. While a self-construction is a much more hands-on process, where you act more or less as the project manager and hire multiple subcontractors to complete the project. 

For a self-construction project, the land has to be bought in advance. You first have to be an owner of an undeveloped lot, and we went through the details on the possibility of getting a mortgage for an undeveloped lot earlier in the article.

If you already own the piece of land, when the time comes for you to start your self-construction project, part of the equity that is retained in your land may very well be used towards the down payment for when you begin seeking out a mortgage to help pay for the construction costs of your new home. So double-check that with your lender, it can pay off.

If you are buying an undeveloped lot with the intention of a self-construction, some lenders can offer you a mortgage for the land purchase with a 0% down payment, if the construction of the property is completed within the next 12 months. And will resort to asking for a down payment only when comes time for the construction loan.


Mortgage rules differ from lender to lender, so make sure to do your due diligence and double-check with your lender to really understand the type of loan you would be getting, and don’t hesitate to look around at what other lenders have to offer.

At the Lac Sainte-Marie Peninsula Paradise, our team’s main priority is to make your experience a happy and successful one, and that begins with providing you with useful information.

Many important questions come up when looking to find your dream home, and we want to make sure that we set a stable ground before we take the next crucial steps together. 

Because every prospective home-owning situation is different, we strongly recommend speaking to a mortgage specialist before making any serious decisions. You want to know that you’ve weighed all your options and that you’ve considered all possible outcomes. 

This way, you can rest assured that you’ve made the correct decision for you, your family, and your future. Your dream home is waiting for you, seek out advice from an expert to begin the journey. 

Feel free to get in touch with Amy St-Pierre, and visit her website for additional information at www.amystpierre.ca.