How Builders Finance a Vancouver Multiplex in 2026: Construction Loans, Draws & Pro Formas

I’ve sat across the table from a lot of owners who walk in holding a development permit for a fourplex and a printout of their lot’s new value under Bill 44. They’ve done the zoning homework. What almost none of them have done is figure out where the roughly $1.5 to $2.5 million it takes to build actually comes from, and in what order it shows up. That gap is where projects die.

Financing a multiplex is not financing a house. You don’t get a single mortgage at closing and move in. You assemble a capital stack, you draw money in stages against work that’s already been inspected, and a chunk of every payment gets held back by law until the job is done. If you don’t understand that rhythm before you break ground, you will run out of cash at the worst possible moment, which in construction is roughly month four.

This is how it actually works on the ground in Vancouver right now. I’m a real estate agent and a builder, not your lender or accountant, so treat the numbers here as illustration and the structure as the part to internalize. Nothing here is financial advice.

What Bill 44 lets you build, and why financing changed

Bill 44 — BC’s Small-Scale Multi-Unit Housing (SSMUH) legislation — forces municipalities to permit multiple units on lots that used to allow one house or a duplex. On a standard lot greater than 280 m² you can build up to four units, and on a qualifying lot greater than 280 m² near frequent transit you can go up to six, per the Province of BC’s SSMUH page. Smaller lots under 280 m² get a minimum of three.

That unit count is the hinge everything else swings on. Three or four for-sale strata units is a residential-style construction loan. Five or more units held as rental opens the door to CMHC MLI Select, which is a completely different and much more generous financing animal. I’ll get to that. The point is that your unit count decides your financing path before you’ve poured a single footing, so decide it early. We break down the build-vs-sell math on our multiplex page and the broader hold strategy in the investment guide.

The capital stack: three layers, paid in order

Think of funding a multiplex as a stack. Money goes in from the bottom and the lender always sits on top of your equity, never under it.

1. Your equity — cash, or value you already own in the land. This goes in first and absorbs the first losses if anything goes wrong. That’s exactly why lenders insist on it.
2. The land loan — financing against the lot itself, often the mortgage you already carry or a new acquisition loan.
3. The construction loan — the big one, released in draws as the building goes up, not all at once.

Lenders size the construction piece on loan-to-cost (LTC): the loan as a percentage of total project cost, including land, hard costs, soft costs, and financing. From what I’ve seen on small Vancouver multiplex deals, conventional construction lenders land somewhere around 65% to 80% of cost depending on the lender, your experience as a builder, and how strong the pro forma looks. The rest is your equity. That’s a rule of thumb from my own deals, not a quoted lender term — every file is underwritten on its own.

Illustrative capital stack

Illustrative example only — every project’s numbers differ; not a financing offer.

Layer	Source	Share of total cost	Example on a $2.0M project
Equity	Owner cash + land equity	~25%	$500,000
Land loan	Existing/acquisition mortgage	(counts toward equity or rolls in)	—
Construction loan	Bank / credit union / private	~75% (LTC)	$1,500,000
Total project cost		100%	$2,000,000

The land you already own is doing real work here. If your lot is worth $1.6M and you owe $400K on it, that $1.2M of land equity can satisfy most or all of the equity the lender wants to see, which is why owner-builders on an existing lot can sometimes do this with little new cash. Buying a teardown to build on is a much heavier lift because you’re funding the land and the build.

How construction draws actually work

You will not get the $1.5M up front. The construction loan is a commitment, and you pull it down in draws as the building progresses. Here’s the cycle, which repeats every time you need money:

1. You (or your general contractor) submit a draw request for work completed to date.
2. The lender sends a quantity surveyor or monitor to inspect the site and confirm the work claimed is actually in place.
3. The monitor reports the cost-to-complete — what’s left to finish the building — and confirms the remaining loan plus your equity still covers it. This is the test that protects the lender from funding a half-built shell.
4. The lender advances the draw, minus the holdback (more on that next), usually directly tied to the cost it just verified.

From what I’ve seen building in Vancouver, draws roughly track milestones: excavation and foundation, framing and lock-up, mechanical/electrical/plumbing rough-in, drywall and finishing, then occupancy. Miss a milestone or have unverified work, and the draw shrinks or stalls. The lender is always making sure that at any moment, the money left in the facility is enough to finish the building. If it isn’t, the gap is yours to fund in cash before they release another dollar. That’s the cash-crunch trap I mentioned — it bites builders who underestimate hard costs and burn through contingency by mid-project.

Interest reserves

You’re paying interest on the drawn balance during construction, but the building isn’t earning anything yet. To handle that, lenders typically build an interest reserve into the loan — they set aside part of the facility to pay your construction-period interest so you’re not writing cheques out of pocket every month. It’s convenient, but understand it’s still your borrowed money; it inflates the loan and you pay it back. Budget for it in the pro forma rather than being surprised by it.

The 10% builders’ lien holdback — this one is the law

This is the part owners are most likely to miss, and it’s not optional. Under BC’s Builders Lien Act, every person paying for construction work must retain 10% of the value of the work or material — a holdback that protects unpaid trades and suppliers. Section 4 of the Builders Lien Act sets the holdback “equal to 10% of the greater of the value of the work or material as they are actually provided … and the amount of any payment made.” You cannot contract your way out of it.

That 10% sits in a holdback account and is released 55 days after a certificate of completion is issued (or after the head contract completes), provided no liens have been filed, per Section 8 of the same Act. If a trade files a lien, the holdback stays frozen until it’s cleared.

The practical effect on financing: your lender holds back its 10% on every draw, so you’re never getting the full claimed amount in real time. You need enough working capital to keep paying trades through that gap, and you don’t see that final 10% back until nearly two months after the building is finished. Builders who plan their cash flow around gross draw amounts instead of net-of-holdback amounts get squeezed. Plan around the net.

CMHC MLI Select: the path that changes the math at 5+ units

If you build five or more units and hold them as purpose-built rental, you can pursue CMHC’s MLI Select insurance, and it is materially more generous than a conventional loan. This is the single biggest reason to seriously consider going to five or six units instead of stopping at four for-sale strata lots.

MLI Select is points-based across three pillars — affordability, energy efficiency, and accessibility. You earn points by committing to things like below-market rents for a period, better energy performance, and accessible design. Hit the top tier (100+ points) and, per CMHC’s MLI Select program page, you can access up to 95% loan-to-value and up to a 50-year amortization. The program requires a minimum of 5 units.

Sit with what 95% leverage and a 50-year amortization do to a project. Less equity locked in, and dramatically lower monthly debt-service because the principal is stretched over five decades — which is what lets a rental multiplex carry itself in a high-cost market like ours. The trade-off is real: you’re committing to affordability and performance standards for years, the insurance premiums are not trivial, and the application is more work than a conventional loan. But for an owner who wants to build and hold rental, this is often the difference between a deal that pencils and one that doesn’t. This is exactly the kind of structuring I help clients think through; it’s a big part of why people come to me as their multiplex realtor.

What construction loans cost in mid-2026

I won’t quote you a lender’s rate, because rates move and they’re priced to each borrower. But here’s the framework. Construction loans are typically floating, priced as prime plus a spread. Prime tracks the Bank of Canada policy rate, which the Bank held at 2.25% at its April 29, 2026 decision, with the Bank Rate at 2.5%, per the Bank of Canada.

From what I’ve seen on small Vancouver multiplex deals, conventional construction money tends to price somewhere in the range of prime plus roughly 1% to 3%, with private and bridge lenders charging more — sometimes a lot more — in exchange for speed and flexibility. That spread depends on the lender, your track record, the loan-to-cost, and the strength of the project. Treat that as my experience-based range, not a rate you’ve been quoted. Get an actual term sheet before you model anything as fact.

Making the pro forma pencil

A pro forma is just the financial dress rehearsal. If it doesn’t work on paper with honest numbers, it won’t work in concrete. Here’s a skeleton of how I think about a small multiplex.

Skeleton pro forma

Illustrative example only — every project’s numbers differ; not a financing offer.

Line	Notes	Illustrative figure
Land (already owned or purchased)	Use real market value	$1,600,000
Hard costs (construction)	Per-unit × units, plus site work	$1,500,000
Soft costs	Permits, design, consultants, DCCs	$250,000
Financing costs	Interest reserve + fees	$150,000
Contingency	10%+ of hard costs — do not skip	$150,000
Total project cost		$3,650,000
Less: equity required	~25% of cost	~$900,000
Construction loan	~75% LTC	~$2,750,000
Stabilized value or sell-out	Appraised rental value or strata sale total	must clearly exceed total cost

The deal only works if that last line — what the finished building is worth, whether you sell the units or hold them and have them appraised as rental — comfortably exceeds your total cost, with enough margin to absorb cost overruns and a slow market. In my experience the projects that get into trouble are the ones built on a thin spread between cost and value, where a 10% hard-cost overrun (entirely normal) erases the profit. Build the contingency in, model the rental income conservatively if you’re holding, and if it only pencils on optimistic assumptions, it doesn’t pencil.

Key Takeaways

• Financing a multiplex is a staged capital stack, not a single mortgage. Equity goes in first, then a construction loan drawn in inspected stages at roughly 65%–80% loan-to-cost (an experience-based range, not a quoted term).
• Draws release against verified cost-to-complete. A monitor inspects each stage; the lender confirms remaining funds finish the building before advancing more. Any shortfall is yours to cover in cash.
• The 10% builders’ lien holdback is the law. BC’s Builders Lien Act requires 10% retained, released 55 days after completion if no liens are filed. Plan cash flow around net-of-holdback draws.
• Five-plus rental units unlocks CMHC MLI Select — points-based, with up to 95% LTV and up to 50-year amortization at the top tier — which often makes a hold-as-rental multiplex pencil when a conventional loan wouldn’t.
• The pro forma must clear cost with margin. Build in 10%+ contingency and conservative income; if it only works on optimistic numbers, it doesn’t work.

Frequently Asked Questions

How much equity do I need to build a Vancouver multiplex?

Plan on roughly 20%–30% of total project cost as equity, though it varies by lender and project. If you already own the lot, your land equity often covers most or all of it, which is why owner-builders sometimes proceed with little new cash. This is a typical range from experience, not a quoted lender term.

What is the 10% builders’ lien holdback?

BC’s Builders Lien Act requires anyone paying for construction work to retain 10% of the work’s value as a holdback protecting unpaid trades. It’s released 55 days after a certificate of completion is issued, provided no liens have been filed against the property.

Can a fourplex use CMHC MLI Select?

No. MLI Select requires a minimum of 5 units. That unit threshold is a major reason builders consider going to five or six units held as rental — it opens up to 95% loan-to-value and up to 50-year amortization at the top points tier, which conventional financing won’t match.

How do construction draws work?

You request money for completed work; the lender’s monitor inspects the site, confirms the work and the remaining cost-to-complete, then advances that draw minus the 10% holdback. The lender always ensures the remaining loan plus your equity is enough to finish the building before releasing more.

Sources

• CMHC — MLI Select — program eligibility (5+ units), points pillars, up to 95% LTV and 50-year amortization.
• BC Builders Lien Act (BC Laws) — Section 4 (10% holdback) and Section 8 (55-day holdback period).
• Bank of Canada — April 29, 2026 rate decision — policy rate held at 2.25%, Bank Rate 2.5%.
• Province of BC — Small-Scale Multi-Unit Housing (SSMUH / Bill 44) — permitted unit counts (3–4 standard, up to 6 near frequent transit).

Figures are illustrative and verified to June 2026 where sourced. Construction lending terms vary by lender, project, and borrower — this is general information, not a financing offer or financial advice.

Next Steps: Work with Rain City Properties

I’ve helped owners take a lot from “Bill 44 says I can build” to a funded, finished, income-producing multiplex — and I’ve also talked people out of projects that didn’t pencil, which is just as useful. The financing structure decides whether your project lives or dies, so get it right before you spend on design. Bring me your lot and your goals, and I’ll walk you through the realistic numbers, the unit-count decision, and the right financing path for whether you want to sell or hold.

Contact Greyden Douglas directly at (604) 218-2289 or book a call to discuss your Vancouver real estate goals.

Related resources: Multiplex Resource Hub · Multiplex Guide · Sell Your Lot to a Builder