Purchase Plus Improvements

Tammy WandzuraMortgage Broker
Improving Your Home

Have you come across your potential forever home but realized it needs some work?

During your house hunt for potential homes, you may come across homes that will have you thinking about a purchase plus improvement option.

Purchase Plus Improvements can include upgrades such as:
– New flooring
– Bathroom or Kitchen remodel
– New furnace and/or water heater
– New shingles
– New driveway
– Any updates that will add value to the home
– Exclusions: new appliances, window coverings, hot tubs, etc.

This blog will outline what you need to know if you want to go in this direction.

Before signing an offer with this option, you will need to consider the following:

  1. A mortgage can be approved with as little as a 5% down payment and include the improvement costs in the mortgage.
  2. The maximum improvement amount is 10-20% (lender specific) of the home’s value, but there are some exceptions if the improvements substantially increase the home’s value.
  3. You will need to provide the lender with quotes from a reputable contractor on a letterhead with the work that needs to be completed. The quotes must be ready when the deal is submitted to the lender.
  4. You cannot change your mind on what you will be improving; for example, the quote provided is for a bathroom to be redone, but later (after taking possession), you decide to use the funds towards a kitchen. The lender will likely not approve or release funds. There could be added costs to you for diverting from the original plan.
  5. You will need the money to fund the improvements up front. You do not have to show proof of these funds to the lender for approval.
  6. The work needs to be completed within 90-120 days after closing, depending on the lender used.
  7. After the work is complete, an inspection is done and sent to the lender. Once the lender signs off on the inspection report, the funds are released. Some lenders will want to see that payments have been made to the contractors before they will reimburse.
  8. Some lenders also have a refinance plus improvements option.

Suppose your mortgage is insurable or your down payment is under 20%. In that case, it will be insured by one of the three insurers, CMHC, Sagen (Genworth), or Canada Guaranty. Click on the links above for further details on the unique benefits of their Purchase Plus Improvements program.

Schedule a call to chat with me about your purchase plus improvement options. We can explain the fine details and provide you easy to understand next steps. I have been assisting clients since 2005 with these and other mortgage solutions.


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You've got questions? Tammy Wandzura and her team have answers. Start your application process, or reach out to find a time to chat. We're here to help.