Residential Mortgage Products
Purchase Plus Improvements, explained
Financing that lets a buyer roll planned renovations into the mortgage at closing, based on what the home will be worth once the work is done — not what it's worth today.
Definition
A Purchase Plus Improvements mortgage finances a home purchase using its "as-improved" value — the property's value after planned cosmetic upgrades are completed — rather than its "as-is" purchase price. It's built for buyers who find a home that's a good fit except for some dated cosmetic work: a kitchen, bathroom fixtures, flooring, new windows, or basement finishing are typical examples.
Instead of buying the home, then separately financing renovations afterward, the improvement cost is estimated upfront, added to the mortgage, and held back by the lender — released only once the work is verified complete, usually within 120 days of taking possession.
How it works, step by step
- The buyer gets official cost estimates for the planned improvements, supported by contractor quotes, building plans, or sketches.
- An appraiser confirms both the "as-is" value (the property today) and the "as-improved" value (what it will be worth once the work is done).
- The mortgage is sized against the as-improved value, subject to the applicable loan-to-value limit.
- At closing, typically two advances occur: the purchase itself, then a second advance to fund the improvements — both completed within 120 days.
- An inspection confirms the improvements were actually completed before the improvement funds (the "holdback") are released.
Guidelines: high-ratio (insured) vs. conventional (uninsured)
This is where the product genuinely splits into two different sets of rules, because a high-ratio (insured) file and a conventional (uninsured) file are underwritten against different limits.
Down payment under 20%
- Owner-occupied properties: up to 4 units eligible (broader than the uninsured track).
- Rental properties eligible up to 80% LTV, provided one unit is owner-occupied.
- Maximum loan-to-value: 95% on 1-2 units, 90% on 3-4 units.
- Maximum value of improvements is capped differently depending on the insurer: commonly up to 20% of the "as-is" property value, though one major insurer caps it at 10% of the "as-improved" value instead — the two aren't interchangeable, so confirm which formula the specific insurer on the file uses.
- Amortization: typically capped at 25 years.
- Mortgage default insurance premiums and rules apply, same as any other high-ratio purchase (see the high-ratio and insurer section of the main guide).
Down payment 20% or more
- Owner-occupied properties: typically capped at 2 units (narrower than the insured track).
- Rental properties generally eligible without the owner-occupied requirement that applies on the insured side.
- Maximum loan-to-value: typically 80% on 1-2 units.
- Maximum value of improvements: typically capped at 20% of the "as-is" property value.
- Amortization: typically up to 30 years, longer than the insured track allows.
- No mortgage default insurance premium, but a full appraisal confirming both as-is and as-complete values is still required.
Figures shown reflect commonly published lender guidelines for this product category as of this page's writing and are illustrative — exact caps, eligible property types, and the improvement-value formula used all vary by lender and by which insurer (CMHC, Sagen, or Canada Guaranty) is on the file. Always confirm the current guideline before relying on a number.
What doesn't qualify
Purchase Plus Improvements is built for cosmetic upgrades — not for fixing problems. Improvements to correct structural deficiencies, make an otherwise uninhabitable home livable, or complete a full addition typically fall outside the program's scope, and would usually need a construction or renovation-specific financing product instead.