Buyer's guide · Ontario · updated regularly

How buying pre-construction actually works

Everything you should understand before signing with a builder in Scarborough, Markham, Pickering, Ajax or Whitby, in plain language.

General information only, not legal, tax or financial advice. Rules change, so have a real estate lawyer review any agreement before the cooling-off period ends.

1. The steps, start to finish

1. Register. Get on the builder's list through an agent for first access to floor plans and pricing.
2. Pick a unit and sign the Agreement of Purchase and Sale (APS) at the sales office, with your first deposit cheque.
3. Lawyer review. Your lawyer reviews the APS during the cooling-off period (condos) or any review period the builder allows (freehold).
4. Deposits are paid on a schedule over the following months.
5. Construction usually takes 2–4 years. You'll pick finishes at the builder's décor centre.
6. Closing. Freehold homes close in one step. Condos usually have an interim occupancy period first, where you move in and pay a monthly occupancy fee until the building is registered and the final closing happens.

2. Deposits

Freehold (detached, semis, townhomes) deposits are usually fixed amounts, like $20,000–$40,000 on signing and the same again every 30–90 days, often adding up to $60,000–$150,000+. Condo deposits are usually a percentage, typically 15–20% of the price spread over 1–2 years, with some projects asking for 5% more at occupancy.

How your deposit is protected:

• Freehold: Tarion protects deposits up to $60,000 on homes priced at $600,000 or less, and up to 10% of the price (maximum $100,000) on homes above $600,000. For agreements signed from April 1, 2026, register your purchase with Tarion within 45 days of signing to keep full protection.
• Condo: the Condominium Act requires deposits to be held in trust (or secured with deposit insurance), and Tarion covers up to $20,000 on top of that.

3. Cooling-off periods

New condos: under Ontario's Condominium Act you have a 10-day cooling-off period after you (or the builder) sign and you receive the disclosure statement. You can cancel within that time and get your deposit back. Use those 10 days for your lawyer's review.

New freehold homes: a 10-day cooling-off period for new freehold homes starts on January 1, 2027 (Homeowner Protection Act, 2024). It begins once you have the signed agreement and the required Tarion documents, and cancelling buyers get their deposit back with interest. For agreements signed before then, freehold deals are typically firm when signed, so ask the builder for a lawyer-review condition (many allow a few days) before you hand over a deposit.

4. HST relief and rebates

New homes in Ontario carry 13% HST: 5% federal and 8% provincial. Builders usually quote prices "HST included" with the standard new housing rebate assigned to them. On top of that, governments regularly add extra relief for new-home buyers. These are the ones in effect right now:

• Read the APS. Ask exactly how each rebate is handled in your agreement: whether the price already reflects it, and whether you or the builder applies.
• Timing matters. Most relief depends on the date you sign the agreement, and some requires construction to start or finish by a deadline. Your lawyer should confirm you qualify.

5. Closing costs

Budget roughly 2–4% of the price on top of your down payment, plus anything that isn't capped in your agreement:

• Land transfer tax: Ontario's, plus Toronto's municipal tax if you buy in Scarborough. First-time buyers get refunds of up to $4,000 (Ontario) and $4,475 (Toronto).
• Development charges and levies: look for a cap in the APS. Uncapped charges can add thousands at closing.
• Tarion enrolment fee, utility meters and hook-ups, law-society levy: often passed to buyers. Check the schedule of adjustments.
• Legal fees and title insurance, usually $2,000–$3,500.
• Condos only: interim occupancy fees each month until final closing.

6. Tarion warranty and delays

• 1 year: workmanship and materials, and the home is fit to live in.
• 2 years: water penetration through the basement or building envelope, electrical, plumbing and heating systems, and Ontario Building Code health and safety items.
• 7 years: major structural defects.
• Delays: builders must set closing (or occupancy) dates and follow strict rules to extend them. If they miss the firm date, Tarion's rules entitle you to compensation of $150 a day for living expenses plus receipted costs, up to $7,500 in total, plus $1,500 more if you got less than 10 days' notice.

Check any builder's record free on the Ontario Builder Directory. I check every builder there before listing their projects.

7. Mortgages and pre-approval

You don't need your final mortgage when you sign, but you should be pre-approved so you know your budget. Pre-approvals and rate holds usually last 90–120 days, and the real approval happens closer to closing, so plan to re-qualify then. Some lenders offer longer rate holds for new construction. If your income changes before closing, talk to your mortgage agent early.

8. Assignments

An assignment means selling your contract to someone else before closing. Builders often charge an assignment fee or limit when you can assign, and some offer "free assignment" as an incentive. If there's any chance you'll need to sell before closing, look for that in the APS.

9. Why use an agent for pre-construction?

The builder pays the agent's commission, so representation costs you nothing. The sales staff work for the builder. I work for you: comparing deposit structures and incentives across builders, getting VIP pricing and first access, flagging risky clauses for your lawyer, and following up through closing.

Sources

• 2026 Ontario Budget: HST relief on new homes
• Canada Revenue Agency: First-time home buyers' GST/HST rebate
• Tarion: freehold cooling-off period (from January 1, 2027) and other updates
• Tarion: deposit protection
• Tarion: register your new freehold home within 45 days
• Tarion: delayed closing compensation
• Osler: Ontario's new HST rebate, key details
• WOWA: Ontario and Toronto land transfer tax rates
• HCRA: Ontario Builder Directory