If the completed condo appraises below the purchase price, the lender may calculate financing from the lower value, leaving the buyer to cover a larger cash shortfall or arrange another approved solution.
Four points to remember
- A mortgage preapproval from years earlier is not a final approval for the completed unit.
- The lender may use the lower of purchase price and appraised value for loan-to-value calculations.
- Builder adjustments, HST treatment and occupancy costs can add to the gap.
- Private financing is a short-term option only when total cost and exit strategy are realistic.
Calculate the real shortfall
Start with the final purchase statement, appraised value, approved mortgage and verified funds. Include builder adjustments, legal costs, taxes and any occupancy-related amounts rather than comparing only price and appraisal.
- Purchase and adjustment total
- Lender-recognized property value
- Approved mortgage and available cash
Find out why the lender changed the approval
A lower appraisal is one cause, but income, credit, debts, property use, condo status or document expiry can also affect funding. Get the reason in writing and identify the lender’s final document deadline.
- Appraisal and comparable sales
- Updated income and debt review
- Condo and occupancy documents
Compare solutions in the correct order
Possible steps include adding verified cash, renegotiating an approved file, using an acceptable co-borrower, changing lenders or arranging short-term secured financing. Legal advice is essential before assuming a builder will extend or release the buyer.
- Use documented liquid funds
- Compare qualified institutional options
- Price short-term financing by net proceeds and exit
Protect the exit from temporary financing
If a private mortgage bridges the closing, define how and when it will be repaid. The plan may involve sale, refinancing after occupancy, income documentation or another event, but it must survive appraisal, timing and cost stress tests.
- Written maturity timeline
- All lender, brokerage and legal fees
- Fallback if the refinance or sale is delayed
Frequently asked questions
Will the bank lend based on my original purchase price?
Not necessarily. The lender may rely on its current appraisal and underwriting policy when determining the maximum mortgage.
Can the builder cancel the shortfall?
That is a legal and contractual question. Buyers should have their real-estate lawyer review the agreement and closing options immediately.
Can a private mortgage cover the gap?
Sometimes, if the property, equity, amount, costs and exit plan are acceptable. It is not automatically safe or suitable simply because closing is urgent.
Official sources and verification
This guide prioritizes primary information from governments, regulators and CMHC. Mortgage policies change; confirm the rules that apply when you apply.
This guide and its calculators are for general education only—not an approval, commitment, or legal, tax or investment advice. Actual rates, fees, underwriting and product terms vary by lender and application.