Contents 12 sections
- Key numbers, October 2026
- How a construction loan works
- How much will a lender advance
- A sample draw schedule
- The holdback protects you, so don’t skip it
- What the lender needs from your builder
- What it costs to carry
- Money for suites: what’s gone and what’s left
- After the build: you, and the people who buy your halves
- What we expect in 2027
- Questions
- Sources
A duplex in BC is usually financed with a construction loan, also called a draw mortgage. The lender pays out in stages as the build passes inspection, you pay interest only on what’s been drawn, and at the end the loan becomes a regular mortgage or gets paid down by selling a half. Expect to bring 20% to 30% of the project yourself, which for most owners is the land. Vancity, for example, lends up to 80% of the finished value, with interest-only payments for up to 24 months.
Key numbers, October 2026
- 2.25%
Bank of Canada policy rate: 2.25%, held on September 2, 2026. The next decision is October 28, 2026.
- 4.45%
Prime rate at the big banks: 4.45%, unchanged since October 29, 2025.
- 10%
Lien holdback: 10% of every payment to the builder, kept until 55 days after substantial completion.
- $900K
Typical loan size: the median new duplex permit in Vancouver declared $900,000 of construction in 2025 and 2026.
- $1.5M
Insured mortgage cap: $1.5 million. About a quarter of new half-duplexes on Vancouver’s 2026 roll are assessed under it.
How a construction loan works
A normal mortgage pays out once, on closing. A construction loan pays out several times, often five, each time the work reaches a stage the lender has agreed to. Before each draw, the lender sends an inspector to confirm the progress, and you pay for those visits. Your lawyer usually checks the title for liens before money moves.
During the build you pay interest only, and only on the amount drawn so far. Your payments start small and climb as the house goes up. When the building is finished and titled, the loan is paid down by a sale, converted to a regular mortgage, or both.
How much will a lender advance?
Lenders measure the loan two ways and take the lower: a share of the finished value, and a share of the cost. Vancity’s construction mortgage goes up to 80% of the finished market value. Other lenders cap the loan at around 75% of the construction cost and expect 25% to 30% from the borrower.
For most of our clients the land is the equity. Take a Hastings-Sunrise lot with a paid-off house assessed at $1.67 million. The finished duplex is worth about $3.02 million, so 80% of finished value is roughly $2.4 million. The build costs $1.1 to $1.6 million before selling costs. The lot already covers the borrower’s share several times over. Owners with an existing mortgage on the house will need to pay it out or fold it in, which lenders handle differently.
A sample draw schedule
Every lender sets its own stages. This is a common five-draw pattern, applied to a $1.2 million loan with the 10% lien holdback taken off each payment:
- Paid to the builder
- 10% lien holdback, released 55 days after completion
Sample five-draw pattern; every lender sets its own stages
| Stage | Share of loan | Advance | Held back (10%) | Paid to builder |
|---|---|---|---|---|
| Subfloor | 15% | $180,000 | $18,000 | $162,000 |
| Lock-up | 25% | $300,000 | $30,000 | $270,000 |
| Drywall | 25% | $300,000 | $30,000 | $270,000 |
| Finishing | 20% | $240,000 | $24,000 | $216,000 |
| Completion | 15% | $180,000 | $18,000 | $162,000 |
| Total | 100% | $1,200,000 | $120,000 | $1,080,000 |
The $120,000 held back is released 55 days after substantial completion, once no liens have been filed.
The holdback protects you, so don’t skip it
BC’s Builders Lien Act makes the owner hold back 10% of each payment to the contractor until 55 days after the work is substantially completed. Trades and suppliers who aren’t paid can file a lien up to 45 days after completion. If you held back properly, the most you can owe them is the holdback. If you didn’t, you could pay twice.
What the lender needs from your builder
Before the first draw, lenders usually want:
- An approved building permit for the duplex.
- A signed construction contract with a price and a payment schedule.
- A detailed budget that adds up to the loan request, plus a contingency.
- A licensed residential builder registered with BC Housing.
- Home warranty enrolment for both homes, which has to be in place before the City issues the permit anyway.
You can’t owner-build your way around this. BC Housing doesn’t issue owner-builder authorizations for homes in new multi-unit buildings, and a duplex is one.
What it costs to carry
Interest is only charged on what’s drawn, so the average balance over the build is roughly half the loan. On a $1.3 million loan drawn over about 16 months, that’s an average of around $650,000:
| Construction loan rate | Interest over 16 months |
|---|---|
| 5% | about $43,000 |
| 6% | about $52,000 |
| 7% | about $61,000 |
Construction loans are priced above regular mortgages. Ask for the rate as a margin over prime, and ask what happens if the build runs past the interest-only period. Vancity’s runs up to 24 months.
Money for suites: what’s gone and what’s left
Two programs people still ask about are closed. BC’s Secondary Suite Incentive Program stopped taking applications on March 31, 2025. The federal Canada Secondary Suite Loan Program was cancelled before it launched. What remains is a CMHC-insured refinance for adding suites to an existing home: up to 90% of the finished value, a $2 million cap, up to four units on the property, and approval needed before construction starts. CMHC’s MLI Select program isn’t an option for a duplex either. It starts at five rental units.
After the build: you, and the people who buy your halves
If you’re keeping a half, the construction loan is paid down by the sale of the other half and the rest becomes a regular mortgage on the half you keep. If you’re keeping both as rentals, lenders like Vancity can count the expected rent when qualifying you.
If you’re selling, your buyers’ financing matters too. Since December 15, 2024, insured mortgages are allowed on homes up to $1.5 million, and buyers of new builds can amortize over 30 years. Above $1.5 million, a buyer needs 20% down. On Vancouver’s 2026 roll, about a quarter of new halves are assessed under $1.5 million, and the Hastings-Sunrise median of $1,498,000 sits right at the line. An east side half priced just under the cap reaches far more buyers than one priced just over it.
What we expect in 2027
- Carrying costs well below 2023. The Bank of Canada’s rate sat at 5% from July 2023 to June 2024. At 2.25%, a duplex built in 2027 carries much less interest than one built three years ago. We don’t forecast rates, but that gap is real money.
- Lenders asking harder questions about build-to-sell. With listings 24% above the 10-year average, expect more lenders to ask how you’d carry an unsold half for six months.
- More halves priced under $1.5 million. On the east side, we expect sellers to design and price for the insured mortgage cap.
Sources
Every outside figure traces to one of these pages, all opened on October 5, 2026. T-City’s own analysis uses the City of Vancouver open datasets. Rates and fee schedules change, so we recheck them for your lot during feasibility.
- Bank of Canada: Policy interest rate
- Bank of Canada: July 12, 2023 rate decision
- Bank of Canada: June 5, 2024 rate decision
- Ratehub: Prime rate in Canada
- Vancity: Construction mortgage
- Forbes Advisor Canada: Construction mortgages
- Clicklaw: Builders liens
- Finance Canada: Mortgage reforms in force December 15, 2024
- BC Housing: Secondary Suite Incentive Program
- nesto: Canada Secondary Suite Loan Program
- WOWA: CMHC MLI Select
- City of Vancouver Open Data: Issued building permits (1,902 new-duplex permits, 2017 to October 2, 2026)
- City of Vancouver Open Data: Property tax report (2026 roll, BC Assessment values as of July 1, 2025)
- T-City: Selling a new duplex in BC (builder licensing, owner-builder limits, disclosure statements, flipping tax)