Who pays what, and when — from your first soft-cost cheque to the reimbursement at first draw to the day the loan becomes a 40-year mortgage. The cash-flow timeline nobody explains to owners.
Owners understand the destination — a finished building with a mortgage — but the journey confuses everyone, because construction loans don't hand you money. They reimburse it, in stages, against work a monitor has verified. Here's the whole timeline in plain English.
Design, engineering, energy modelling and permit fees come first — typically $50,000–80,000 on a five-unit build — and they're paid out of pocket, because no lender funds a project that doesn't have drawings yet. This is the real cash commitment of a multiplex project. The crucial fine print: on a CMHC-financed build these costs are part of the approved project budget, so they come back to you at the first draw. You're floating them for months, not donating them.
Approval in hand, the construction facility closes and three things happen at once: any existing mortgage on the property is discharged (paid out and rolled into the new loan — the building takes over your old debt), your land equity is credited as your contribution, and the draw schedule is set. Note what didn't happen: no big cheque landed in your account.
Construction money arrives in 4–6 instalments tied to verified progress:
| Draw | Typical trigger | Roughly |
|---|---|---|
| 1 | Closing — soft-cost reimbursement, mobilization | 10–15% |
| 2 | Foundation complete | 15–20% |
| 3 | Framing, roof on — "lock-up" | 20–25% |
| 4 | Mechanical/electrical rough-in, drywall | 20–25% |
| 5–6 | Finishes · occupancy · holdback release | remainder |
Before each advance, a quantity surveyor or project monitor visits, confirms the work is done and the budget is on track, and certifies the draw. Ontario's Construction Act also requires a 10% holdback on each draw, released after the lien period — it's why the last money arrives weeks after the last nail. None of this is bureaucracy for its own sake; it's what keeps a half-built project from running out of loan.
Who covers the gap between doing work and getting the draw? The builder does — trades get paid, then the draw reimburses. This is why a builder's financial capacity matters as much as their craftsmanship, and it's a fair question to ask anyone quoting your project: "who carries the work between draws?" If the answer is "you do," keep shopping.
On a CMHC construction-to-permanent facility, interest during construction is capitalized — calculated on drawn funds and added to the loan balance, with an allowance for it built into the budget from day one. You write no monthly cheques while the building can't yet pay for itself. (Conventional construction loans typically DO bill monthly interest in cash — one more quiet advantage of the program route.)
At completion and lease-up, the facility converts into the permanent mortgage: the drawn balance (including capitalized interest and the CMHC premium) becomes a 40-year amortizing loan at the insured rate locked for the term. From here it's a rental building doing what rental buildings do: rents pay the mortgage, tenants build your equity, and — if the building appraises well — a refinance door opens down the road.
We map every dollar — yours and the lender's — month by month, before you commit to anything.
Get a Site ReadTypical structures as of September 2026; each lender sets its own draw schedule and terms. Planning guidance, not financial advice.