Purchase Plus Improvements Mortgage: Complete Guide
Finance your home purchase and renovations with one mortgage - Save on interest and simplify your financing
Purchase Plus Improvements is a specialized mortgage program that allows Canadian homebuyers to include the cost of immediate renovations or improvements in their mortgage. Instead of taking out a separate loan or line of credit for upgrades, you can finance everything through a single, low-rate mortgage.
What is Purchase Plus Improvements?
- Find a property that needs improvements
- Get detailed quotes from licensed contractors
- Apply for a mortgage that includes purchase price plus improvement costs
- Lender appraises property (as-is and as-improved value)
- Upon approval, renovation funds are held in a holdback account
- Complete renovations within specified timeframe (usually 4-6 months)
- Lender inspects work and releases funds to contractors
Purchase Plus Improvements is available through most major Canadian banks and lenders, including:
- Major banks (TD, RBC, BMO, Scotiabank, CIBC)
- Credit unions and alternative lenders
- Monoline mortgage lenders
Most lenders allow up to:
- $40,000 or 10% of as-improved value, whichever is less
- Some lenders offer higher limits for qualified borrowers
- Limits may vary based on property type and location
✓ Eligible
Kitchen/bathroom upgrades, basement development, energy efficiency improvements, accessibility modifications, structural repairs, additions
✗ Typically Ineligible
Swimming pools, hot tubs, luxury landscaping, cosmetic improvements that don't add value
Popular Use Cases
Purchase Plus Improvements is perfect for a variety of renovation scenarios
Buy below market value and renovate to increase equity immediately
Modern kitchen upgrades to increase home value and enjoyment
Add living space and potential rental income opportunities
Windows, insulation, and HVAC improvements for long-term savings
Aging-in-place home modifications for safety and comfort
Foundation, roof, electrical, and plumbing improvements
Key Benefits
Why Purchase Plus Improvements makes financial sense
One mortgage instead of separate financing for purchase and renovations
Better rates than renovation loans or credit cards
Increase home value through strategic improvements
Less paperwork and lower transaction costs
Mortgage interest may be tax-deductible for investment properties
Streamlined approval and funding for both purchase and improvements
How the Process Works
Step-by-step timeline from application to completion
Identify a home that needs improvements and has good potential
Obtain detailed written quotes from licensed contractors
Include both purchase price and renovation costs in your application
Lender orders appraisal for as-is and as-improved values
Receive approval and close on the property purchase
Renovation funds held in separate account by lender
Work with contractors to complete approved improvements
Lender inspects work and releases funds to contractors
Eligibility Requirements
Credit Score
Minimum 600-680 depending on lender; higher scores may qualify for better rates
Down Payment
Minimum 5% for owner-occupied (includes improvements); 20% for investment properties
Income Verification
Proof of stable income to support total mortgage amount (purchase + improvements)
Contractor Requirements
Licensed and insured contractors; detailed written quotes required
Timeline Restrictions
Renovations must be completed within 120-180 days (4-6 months) of closing
Real-World Success Stories
See how Canadians have used Purchase Plus Improvements to achieve their goals
Scenario:
Sarah and Mike found a 3-bedroom home in Toronto for $650,000 with a dated 1980s kitchen.
Solution:
They secured a Purchase Plus Improvements mortgage with $35,000 for a complete kitchen renovation including new cabinets, countertops, appliances, and flooring.
Result:
After renovations, their home appraised at $710,000, creating instant equity while enjoying a modern kitchen. Monthly payment was lower than if they had taken a separate renovation loan.
Scenario:
The Johnson family needed more space for their three children but didn't want to move from their Calgary neighborhood.
Solution:
They purchased a home for $480,000 with an unfinished basement and included $40,000 in their mortgage for basement development with two bedrooms, bathroom, and rec room.
Result:
Created 800 sq ft of additional living space, increased home value by $90,000, and kept the kids in their current school district.
Scenario:
James, an experienced investor, found a duplex in Vancouver needing significant updates to both units.
Solution:
Purchased the property for $820,000 with $60,000 in improvements for kitchen and bathroom updates, new flooring, and paint throughout both units.
Result:
After renovations, rental income increased from $2,800 to $4,200 per month, and property value increased to $950,000.
What Our Clients Say
Real experiences from Canadians who used Purchase Plus Improvements
"The Purchase Plus Improvements program was perfect for us! We bought our dream home and updated the entire main floor without taking on high-interest debt. Our mortgage broker walked us through every step."
— First-Time Homebuyer
"We transformed a dated property into our dream home. The holdback account system gave us peace of mind, and having everything financed through one mortgage saved us thousands in interest."
— Growing Family
"As an investor, this program has been a game-changer. I've completed three value-add projects using Purchase Plus Improvements, and the returns have been excellent. Much better than using expensive bridge financing."
— Real Estate Investor
Frequently Asked Questions
Common questions about Purchase Plus Improvements mortgages
Ready to Buy and Improve Your Dream Home?
Get expert guidance on Purchase Plus Improvements mortgages. Our mortgage professionals will help you navigate the process and maximize your financing options.
Free consultation - No obligation - Expert advice