Construction Loans in New Brunswick

What is a construction loan in New Brunswick?

A construction loan in New Brunswick is a short-term financing product that releases funds in stages as your home is built, governed by the New Brunswick Building Code for permits and inspections, and protected by the Construction Remedies Act which mandates a 10% statutory holdback on every payment in the construction chain. New Brunswick's construction lending environment has characteristics that distinguish it from other provinces. The province charges 15% HST (10% provincial + 5% federal) on all construction materials and labour under the HST framework. This is the highest combined sales tax rate in Canada, shared with Nova Scotia and Newfoundland. New Brunswick does not offer a provincial component rebate on the HST for new housing, though the federal GST New Housing Rebate remains available for homes under $450,000. New Brunswick charges a flat 1% Real Property Transfer Tax on the greater of the purchase price or assessed value when title is registered, with no exemptions for first-time buyers, family transfers, or new construction. On a $400,000 completed home, the transfer tax totals $4,000. This is simpler and generally lower than Ontario's tiered structure but higher than Alberta's nominal registration fees. During the construction phase, funds are released through a draw schedule that typically includes four to five stages: foundation, framing, lockup (roof, windows, exterior sealed), interior finishing, and final completion. Before each draw, a certified inspector or appraiser visits the site to confirm the work is complete and meets Building Code standards. You pay interest only on the amount drawn, not the full loan amount. New Brunswick's new home warranty protection is provided through the Atlantic Home Warranty Corporation, which has operated across Atlantic Canada since 1976. Coverage includes 1 year for defects in workmanship and materials, 2 years for building envelope and delivery and distribution systems, and up to 10 years for major structural defects with $70,000 in coverage including engineering fees. Unlike Manitoba's mandatory builder registration, participation in the Atlantic Home Warranty program in New Brunswick is voluntary, though most institutional lenders require it before approving construction financing. New Brunswick's construction lending market includes the Big 5 banks, local credit unions like UNI Financial Cooperation (New Brunswick's largest Acadian credit union with $5.3 billion in assets and 35 branches) and Brunswick Credit Union, and private construction lenders. The Financial and Consumer Services Commission (FCNB) regulates mortgage brokers in New Brunswick under the Mortgage Brokers Act, requiring brokers and brokerages to act in the best interests of the borrower. The federal criminal interest rate cap, reduced to 35% APR as of January 1, 2025 under Criminal Code, Section 347, protects New Brunswick borrowers from predatory construction lending rates. Any construction loan exceeding 35% APR is a criminal offence.

What types of construction loans are available in New Brunswick?

• Construction-to-permanent loans that automatically convert to a conventional mortgage after your New Brunswick home is complete, eliminating the need for a second loan application and saving you a second set of legal fees
• Stand-alone construction loans that fund only the building phase, with a separate mortgage application upon completion. Useful if you want to shop for the best permanent mortgage rate after the build is finished
• CMHC Progress Advance insured construction loans for New Brunswick borrowers with as little as 5% down payment. The lower down payment makes construction financing accessible to borrowers who could not otherwise meet the 25% conventional requirement
• Owner-builder construction loans for New Brunswickers who act as their own general contractor. These carry stricter requirements and most lenders require professional project management oversight given the complexity of managing trades and building code compliance
• Rural and waterfront construction loans for building outside Moncton, Fredericton, or Saint John on larger parcels or riverfront properties along the Saint John River, Miramichi River, or the Fundy coast. Servicing costs for water wells, septic systems, and power connections add to the total budget
• Modular and pre-fabricated home construction loans for factory-built homes delivered and placed on New Brunswick building sites. Draw schedules differ because factory stages happen off-site before delivery to the lot
• Private construction loans from New Brunswick-based private lenders for borrowers who do not qualify with institutional lenders. Rates typically start around 8% to 14.5% with lender fees of 2% to 6%, but approval can happen within days rather than weeks

Who qualifies for a construction loan in New Brunswick?

• ✓New Brunswick resident or Canadian citizen/permanent resident building in New Brunswick, at least 19 years of age (the age of majority in New Brunswick) with valid government-issued photo identification
• ✓Minimum down payment of 25% to 35% of total project cost for conventional construction loans, or as low as 5% through the CMHC Progress Advance program for insured loans
• ✓Good to excellent credit score, typically 680 or higher. Some lenders require 700+. Construction loans carry more risk for lenders, so credit requirements are stricter than standard New Brunswick mortgages
• ✓Verifiable income sufficient to cover estimated mortgage payments once the construction loan converts to a permanent mortgage, evaluated using the federal stress test rate
• ✓A builder enrolled in the Atlantic Home Warranty program with valid warranty coverage commitment, liability insurance, and a track record of completed projects. Most institutional lenders verify warranty enrollment before releasing funds
• ✓Complete construction plans including architectural drawings, a New Brunswick building permit issued under the Building Code, a detailed construction budget, and a realistic build timeline that accounts for New Brunswick's winter construction limitations
• ✓Clear title to the building lot or a purchase agreement for the land, with an up-to-date land survey and confirmation of lot servicing (water, sewer or septic, electrical, and adequate drainage)

Construction loan rates, amounts, and terms in New Brunswick

Institutional construction loan rates in New Brunswick currently range from approximately 4.45% to 7.5% depending on the lender, your credit profile, and the loan-to-value ratio, while private construction lenders charge 8% to 14.5% with additional lender fees of 2% to 6%. The Bank of Canada held its policy rate at 2.25% through early 2026, keeping prime rate at 4.45% and construction loan rates at historically reasonable levels. Loan amounts for construction financing in New Brunswick range from $100,000 for smaller builds in rural areas to over $1,000,000 for custom homes in Rothesay, Quispamsis, or Fredericton's south side. Lenders base the maximum loan amount on the lower of the total project cost or the appraised completion value, minus your required down payment. The construction period typically runs 8 to 18 months for a standard single-family home in New Brunswick. The building season is concentrated from April through November, as foundation and excavation work must be completed before freeze-up. Coastal areas near the Bay of Fundy and the Northumberland Strait experience milder winters than inland regions, but ground frost remains a factor province-wide. Complex custom builds can extend to 24 months. Draw schedule breakdown for a typical $350,000 New Brunswick construction loan: - Draw 1 (15%): Foundation complete and inspected, $52,500 released - Draw 2 (25%): Framing complete, $87,500 released - Draw 3 (25%): Lockup (roof, windows, exterior doors installed), $87,500 released - Draw 4 (20%): Interior finishing (drywall, plumbing, electrical rough-in), $70,000 released - Draw 5 (15%): Final completion and occupancy permit, $52,500 released New Brunswick's Construction Remedies Act, which replaced the former Mechanics' Lien Act in November 2021, requires a 10% statutory holdback on every payment in the construction chain for private projects. For a $350,000 construction loan, the lender holds back $35,000 across all draws, releasing it after the lien period expires (60 days after the certificate of substantial performance is issued). This holdback protects you from subcontractor and supplier liens. The 10% rate was reduced from the previous 15-20% under the Mechanics' Lien Act. New Brunswick construction cost context Building costs in New Brunswick range from approximately $155 to $250 per square foot for standard builds, with custom homes reaching $300 to $450 per square foot. A 1,800 square foot home at $200 per square foot translates to roughly $360,000 in construction costs before land, permits, and soft costs. New Brunswick's 15% HST applies to both materials and labour. On a $350,000 build, the HST totals approximately $52,500, though the federal portion (5%) is partially offset by the GST New Housing Rebate for homes valued under $450,000. Factor in lot costs of $30,000 to $150,000+ depending on location, and total project costs for a standard build typically range from $400,000 to $600,000. Mortgage brokers in New Brunswick are licensed under the Mortgage Brokers Act and regulated by the Financial and Consumer Services Commission (FCNB), which requires full cost of borrowing disclosure including all fees and the APR before you sign any construction loan agreement.

Pros and cons of construction loans in New Brunswick

Construction financing options in New Brunswick compared

Tips for getting a construction loan in New Brunswick

1. 1.Verify your builder's enrollment in the Atlantic Home Warranty program before signing any contract. While enrollment is voluntary in New Brunswick, most institutional lenders require it, and you want the protection of up to 10 years of structural defect coverage regardless
2. 2.Build a 15% to 20% contingency into your construction budget above the contractor's estimate. Maritime construction costs have seen increases through 2025, and material prices can shift between the time you budget and the time you build, particularly with ongoing tariff uncertainty on imported lumber and building products
3. 3.Plan your construction timeline to have foundations poured by late May or early June. This maximizes the April-to-November building window and reduces the risk of carrying costs over winter while your project sits unfinished. Coastal areas near Moncton and Saint John have slightly longer building seasons than inland areas near Edmundston or the upper Saint John River valley
4. 4.Apply through UNI Financial Cooperation if you are in the Acadian regions of northern and eastern New Brunswick, or Brunswick Credit Union for anglophone communities. These credit unions have local knowledge of building costs and lot values that the Big 5 banks may lack
5. 5.Compare the CMHC Progress Advance program against conventional options. The lower 5% down payment is attractive, but CMHC mortgage insurance premiums (2.8% to 4.0% of the loan amount) add to your total cost. Run both scenarios to see which path is cheaper
6. 6.Factor the full 15% HST into your construction budget from the start. On a $350,000 build, HST totals approximately $52,500. Apply for the federal GST New Housing Rebate if your home's value is under $450,000 to recover a portion of the federal component
7. 7.Explore NB Power's New Home Energy Savings Program for rebates on energy-efficient construction. You must register before your building permit is issued. The program costs $99 plus HST for building plan modelling, with no cost for the on-site energy evaluation after construction
8. 8.Keep detailed records of every construction invoice, change order, and inspection report. Lenders require documentation at each draw stage, and Building Code inspections must be passed before draws are released. The 10% holdback under the Construction Remedies Act is released 60 days after the certificate of substantial performance, so plan your cash flow accordingly

Ready to build your home in New Brunswick?

Apply online with Sphera Credit for New Brunswick construction financing. Our AI-powered review evaluates your project plans, builder credentials, and full financial profile so you can break ground with confidence.