Gap Financing

Gap financing is a short-term loan used in real estate to cover funding gaps until permanent financing or sales proceeds are available.

Gap Financing

September 30, 2025


What is Gap Financing?

Gap financing is short-term funding used to cover a temporary shortfall until permanent financing or revenue becomes available. It is common in construction, development, and acquisitions. Gap financing may come with higher rates and stricter terms, reflecting the higher risk for lenders.

Why Gap Financing Matters in Real Estate

Gap financing matters in real estate because it allows projects to continue without delay when permanent funding is not yet secured. It bridges timing mismatches and provides liquidity for critical stages. However, it can increase project costs and requires a clear exit strategy.

Example of Gap Financing in Action

A condo project nearing completion requires final contractor payments before unit sales close. Developers secure gap financing for three months, repaying the loan once proceeds from closings are received.

Key Takeaways

  • Gap financing bridges funding shortfalls temporarily.
  • Allows projects to continue without delay.
  • Carries higher costs due to risk.
  • Exit strategies must be well-defined.
  • Common in construction and development deals.

Related Terms

Additional Terms

Public Realm Improvements

Public realm improvements are enhancements to public spaces such as sidewalks, parks, plazas, and streetscapes, often funded or contributed by. more

Mortgagee in Possession

A mortgagee in possession is a lender who takes control of a property after borrower default, but before foreclosure or power of sale. The lender. more

Lease Surrender Agreement

A lease surrender agreement is a negotiated contract between a landlord and tenant that ends a lease before its scheduled expiration. Terms may. more

Green Infrastructure

Green infrastructure refers to natural or engineered systems that manage stormwater, reduce heat, and improve sustainability in developments.. more

Escrow Holdback

An escrow holdback is a portion of funds withheld at closing and held in escrow until specific conditions are met, such as completion of repairs,. more

Underused Housing Tax

The Underused Housing Tax (UHT) is a federal annual 1% tax on the value of vacant or underused residential property owned by non-resident,. more

More For You

Meet The Agent: Daniel Kim, Sotheby's International Realty Canada

Meet The Agent: Daniel Kim, Sotheby's International Realty Canada

Welcome to Meet the Agent, an ongoing series profiling real estate agents from across Canada. With more than 150,000 agents, brokers, and salespeople working in 75 different boards and associations across the country, we thought it was about time they had a place to properly introduce themselves.

If you or someone you know deserves the same chance, email agents@storeys.com to apply.

Keep ReadingShow less

The Great Canadian Dream Of Homeownership Isn’t Dead, But It Is Evolving

The Great Canadian Dream Of Homeownership Isn’t Dead, But It Is Evolving
A residential neighbourhood in Calgary / Jeff Whyte, Shutterstock

For years, the obituary for the “Great Canadian Dream” of homeownership has been written in steep market prices and interest rate hikes. But according to RBC’s Spring 2026 Home Ownership Poll, the dream hasn’t actually died – it’s adapted.

The online survey polled 1,719 Canadians between January 7 and January 25, 2026 using Leger’s online panel.

Keep ReadingShow less
TRENDING: The Great Canadian Dream Of Homeownership Isn’t Dead, But It Is Evolving

Bank Of Canada Holds Interest Rate Steady In Second 2026 Decision

Bank Of Canada Holds Interest Rate Steady In Second 2026 Decision

The Bank of Canada left its overnight rate at 2.25% on Wednesday — as many of the nation's banks had predicted — keeping borrowing costs steady as global and domestic developments continue to shape the economic outlook.

Volatility has spiked since the outbreak of conflict in the Middle East, with oil and natural gas prices rising sharply, and financial markets tightening.

Keep ReadingShow less

Chartwell To Sell Waterloo Asset To Resolve Competition Bureau Concerns

Chartwell To Sell Waterloo Asset To Resolve Competition Bureau Concerns

Chartwell Clair Hills at 530 Columbia Street West in Waterloo. (Chartwell)

Last summer, Chartwell Retirement Residences (TSX: CSH.UN) announced that it had reached an agreement to acquire a portfolio of six seniors housing communities located in southwest Ontario for $432 million, continuing to expand its footprint in the region.

The portfolio of six properties represented the entire seniors housing portfolio of Ontario-based Sifton Properties and totalled to 1,024 suites (plus 29 additional units under construction), split between the following six properties:

Keep ReadingShow less

Canada Housing Starts Hold Steady In February: CMHC

Canada Housing Starts Hold Steady In February: CMHC

Canada’s housing construction trend remained largely unchanged in February, even as monthly starts ticked higher, according to new data from the Canada Mortgage and Housing Corporation.

CMHC reported that the six-month trend in housing starts — measured as the six-month moving average of the seasonally adjusted annual rate (SAAR) — edged up 0.4% in February to 256,005 units.

Keep ReadingShow less

Manulife Sells Downtown Ottawa's EDC HQ To Regional Group For $143.5M

Manulife Sells Downtown Ottawa's EDC HQ To Regional Group For $143.5M

The 19-storey office tower at 150 Slater Street in Ottawa. (CBRE)

In late-February, Ottawa-based real estate firm Regional Group announced that they had acquired 150 Slater Street in downtown Ottawa, a landmark office building near Parliament Hill.

Located at the corner of Slater Street and O’Connor Street, two blocks away from Confederation Park and within 50 metres of the LRT Parliament Station, 150 Slater Street is a 19-storey Class A office tower that was purpose-built as the global headquarters for Crown corporation Export Development Canada (EDC), which was seeking to consolidate its operations from two nearby buildings.

Keep ReadingShow less

Canada Housing Starts Rise In 2025, But Condo Pipeline Weakens: CMHC

Canada Housing Starts Rise In 2025, But Condo Pipeline Weakens: CMHC

Canada added more new housing supply in 2025, driven largely by record rental construction and a growing share of missing middle housing — but new data suggests underlying vulnerabilities are building, particularly in major ownership markets like Toronto and Vancouver.

According to the Spring 2026 Housing Supply Report from the Canada Mortgage and Housing Corporation (CMHC), national housing starts rose 6% year-over-year in 2025, to 259,000 units. Activity exceeded the 10-year average in nearly every major market, with one notable exception: Toronto, where starts fell well below historical norms and reached the lowest per-capita level among Canada’s seven largest census metropolitan areas (CMAs).

Keep ReadingShow less

Peterson Proposes 34-, 29-Storey Rental Towers On SE Marine Drive

Peterson Proposes 34-, 29-Storey Rental Towers On SE Marine Drive

The two-tower project proposed for 605-695 SE Marine Drive in Vancouver. (MCMP Architects, Peterson)

Fresh off of a brand refresh, Vancouver-based Peterson is now advancing one of its largest planned projects to date, according to a new rezoning application published by the City of Vancouver last week.

The subject site is 605-695 SE Marine Drive, located at the northwest corner of the intersection with Fraser Street. The L-shaped site is currently occupied by a large apartment complex, known as Marine Terrace, which extends up Fraser Street to E 65th Avenue. The property is a single parcel that BC Assessment values at $31,874,000 in its latest assessment, and 605 SE Marine Drive is held by Peterson under Fraser Marine Drive Holdings Inc.

Keep ReadingShow less
Privacy PolicyAbout UsTerms of UseAdvertise with UsJobsContact UsRSS Feed
All rights reserved SiteMedia © 2026.