Purchase Plus Home Renovation Loans & Mortgage Financing

The home you would love to buy needs some TLC, perhaps a new kitchen, floors, basement renovation, etc. There is a way.

With this underused program, there is a way to purchase a home and have enough funds left over for the renovations to make it your true dream home. With this program, you may be able to purchase a home that you would otherwise have to pass on because you had no way of paying for the improvements at a reasonable cost. Whether it’s a new kitchen, bathroom, windows, flooring, etc., this program provides you with a venue to purchase a home and include the cost of renovations in your purchase.


The Improvements program provides qualified buyers the opportunity to finance up to 10% of the purchase price or “as-improved value” of the home to finance renovations and include the cost in their mortgage. The improvements program, is offered by all three insurers (CMHC, Genworth, Canada Guaranty) and funded through the lending source.

For example, if the purchase price of a home is $400,000 and the renovation you want to complete costs $40,000, for an as-improved value of $440,000, you could borrow that 10% of the property value against the as complete value of $440,000, rather than of the purchase price. This is a fabulous option for borrowers who have smaller down payments and can’t afford the down payment, closing costs, plus the renovations.

It’s a very basic structure. The borrowers must provide a quote from a contractor, before closing on the house, which is then submitted to both the mortgage lender and the insurer for approval. The contractor quotation should break down the work involved and the costs associated with it. Once both the insurer and the lender approve the improvement amount, it is added to the mortgage loan.

At closing, the improvement portion of your mortgage is advanced to your lawyer or held by the lender in trust. You do not have access to these funds until the renovation is completed. When the renovation is complete, the lender sends an appraiser or inspector to your home, to confirm that the renovation is complete. Once confirmed, the lender will authorize release of the improvement amount to you.

This program alleviates a barrier to entry for many buyers and opens up the amount of properties they can look at to purchase.

Want more information?

Call us at (905) 265-0246 or email us at mortgages@thefinancialforum.ca