# What are the key considerations for land acquisition, development, and construction (ADC) loans?

> Land acquisition, development, and construction (ADC) loans require careful consideration because they are risk-weighted at 150% unless specific criteria are met [osfi-car-2026-rental, 4.1.13].

Category: Purchasing
Last verified: 2026-02-18
Source: https://ratellow.com/faqs/purchasing/what-are-the-key-considerations-for-land-acquisition-development-and-construction-adc-loans

## Answer
Land acquisition, development, and construction (ADC) loans require careful consideration because they are risk-weighted at 150% unless specific criteria are met [osfi-car-2026-rental, 4.1.13]. These exposures involve financing land acquisition for development and construction purposes, or the development and construction of residential or commercial properties.

## Institutional highlights
- Construction loans can be more expensive due to higher risk for the lender.
- If your loan depends on future property sales, it's seen as riskier.
- You might get better loan terms on a new build if you have a lot of pre-sales or a large down payment.
- For taller condo projects, pre-sales are extra important; rental buildings have different rules.
- When buying land to build on, a smaller mortgage (larger down payment) can help you qualify for better rates.

## Related guide
- https://ratellow.com/guides/new-construction-draws

## Sources
- 4.1.13 Land acquisition, development and construction exposures — https://www.osfi-bsif.gc.ca/en/guidance/guidance-library/capital-adequacy-requirements-car-2026-chapter-4-credit-risk-standardized-approach#4.1.13
- Footnotes — https://www.osfi-bsif.gc.ca/en/guidance/guidance-library/capital-adequacy-requirements-car-guideline-2026
- I. Purpose and scope of the guideline — https://www.osfi-bsif.gc.ca/en/guidance/guidance-library/residential-mortgage-underwriting-practices-procedures-guideline-2017#1.0
- Page 3 — https://assets.cmhc-schl.gc.ca/sf/project/cmhc/pdfs/factsheets/new/cmhc-quick-reference.pdf#page=3