A client is applying for a construction draw mortgage for a new build in suburban Toronto. The total appraised value upon completion is $1,000,000, and the construction costs are estimated at $600,000. The lender will provide financing up to 80% LTV of the completed value. What is the maximum construction mortgage amount the client can obtain, assuming they have sufficient cash for the land purchase and initial equity requirements?

Question: A client is applying for a construction draw mortgage for a new build in suburban Toronto. The total appraised value upon completion is $1,000,000, and the construction costs are estimated at $600,000. The lender will provide financing up to 80% LTV of the completed value. What is the maximum construction mortgage amount the client can obtain, assuming they have sufficient cash for the land purchase and initial equity requirements?

Answer options:

• A. $600,000
• B. $750,000 ✅ C. $800,000
• D. $1,000,000

Correct answer: C. $800,000

Explanation: Construction draw mortgages are typically based on the 'as complete' appraised value. At an 80% LTV, the maximum mortgage amount is 80% of $1,000,000, which equals $800,000. The actual construction costs are considered, but the LTV cap is applied to the final value.