Purchase Plus Improvements — Finance Renovations with Your Mortgage

A Purchase Plus Improvements mortgage lets you finance the cost of renovations directly into your mortgage when buying a home. Instead of purchasing the property and then taking out a separate loan for upgrades, you roll everything into one mortgage with one monthly payment.

This program is ideal for buyers who find a home in the right location at the right price — but it needs work. Rather than competing for move-in-ready homes at premium prices, you can target properties that need updating and finance the improvements affordably.

The improvement funds are held back at closing and released after the work is completed and verified. This protects both you and the lender — the money is only released when the renovations are done properly.

When your down payment is less than 20%, you need mortgage insurance from CMHC, Sagen, or Canada Guaranty. Here are the key rules for insured Purchase Plus Improvements mortgages:

For conventional mortgages (20% or more down), the rules are more flexible. Some lenders allow higher improvement amounts and longer completion timelines. I can help you compare options based on your specific situation — use the CMHC calculator to estimate your insurance premium.

There are several ways to finance renovations. Here's how Purchase Plus Improvements compares to the alternatives:

For most buyers, Purchase Plus Improvements offers the best combination of low rates and manageable payments. The HELOC option works well for renovations after you've built equity, but isn't available at the time of purchase for most first-time buyers.

Applying for a Purchase Plus Improvements mortgage is similar to a standard mortgage application with a few additional steps:

• Standard mortgage documents — Income verification, employment letter, credit check, down payment proof (see the pre-approval guide for a complete document list).
• Detailed contractor quotes — Written estimates from licensed contractors breaking down the work, materials, and costs.
• Renovation plan — A description of the planned improvements, ideally with photos of the current condition.
• Down payment for full amount — Remember, your down payment is calculated on the purchase price plus improvement costs.

Here are two common scenarios I see with Purchase Plus Improvements in the Surrey market:

Example 1: First-Time Buyer Updates a Dated Home

Instead of competing for a move-in-ready $700,000+ home, this buyer purchased a $650,000 property and customized it to their taste — often ending up with a home worth more than the total investment.

Example 2: Energy Efficiency Upgrades

Energy-efficient upgrades reduce monthly utility costs and may qualify for additional government rebates — a smart long-term investment financed at mortgage rates rather than higher personal loan rates.

For most buyers looking at properties that need updating, the pros significantly outweigh the cons. The key is proper planning — get accurate quotes, build in a contingency buffer, and work with experienced contractors.