Closing day is when you qualify, not signing day

The pre-approval you get before signing a pre-construction agreement is for a mortgage you will not take for two or three years. Rates will be different. Your income will be different. The appraisal will be whatever the market is on that day. On closing day the lender tests all of it again, and if you fail, you still have to close.

This is the single most serious risk in buying a home that does not exist yet, and almost nobody models it.

What gets re-tested

The rate. You qualify at the greater of your contract rate plus 2% or 5.25%. A rate two points higher than today adds roughly 12–15% to your test payment on a 25-year amortisation.

Your income. Most people's goes up. Some people's goes down — a job change, a parental leave, a move to self-employment that has not yet produced two years of returns.

Your debts. A car lease taken in year two counts in full against you in year three.

The appraisal. Lenders lend on the lower of price and appraised value. If the market softens 8% between signing and closing on a $1,100,000 home, the appraisal may come in at $1,012,000, and the $88,000 gap comes from you in cash.

The insurance cap. If your closing price is at or above $1.5M you cannot get an insured mortgage and need 20% down, regardless of what you were told when you signed.

What happens if you fail

You are still bound to close. Options in rough order of pain: bring more down payment, add a co-signer, take a B-lender at a higher rate, assign the agreement (with the builder's consent and fees), or lose the deposit. Buyers who discover this at closing minus 60 days have the fewest options.

How to know now

Project everything forward and test it. The closing-day readiness tool takes your price, your deposit schedule, your income and its growth, your debts, a pessimistic future rate and an optional market drop, and tells you whether you pass and by how much. Run it three ways:

1. As things are.
2. With the rate one point higher.
3. With the market down 5%.

If you pass all three, go firm with confidence. If you fail two, do not go firm until you have a plan — more savings per month, a debt paid off, a longer amortisation, or a cheaper home.

Two rules that help

30-year amortisation. Since December 2024 it is available on insured mortgages for first-time buyers and for anyone buying a new build. It lowers the test payment materially. Model both.

Rate hold at 120 days. Lenders hold rates for up to 120 days before closing. Shop then, not at 30 days when the builder's firm date arrives and everything is a rush.