Are you daydreaming about your dream home?

Purchase-Plus Improvements products turn your dream home into a reality.

many home buyers find their dream property, but it needs costly and immediate upgrades. instead of racking up credit cards or selling off investments, consider a mortgage specifically designed to allow you to add the cost of those immediate renovations into your home.

What is a purchase plus improvements mortgage?

The flexible mortgage product enables you to not only buy a home that is more affordable due to required upgrading, but also allows you to customize your renovations. With as little as 5% down, you can buy a home, renovate it and pay for it all in one mortgage payment.

If you’re buying a home but want to finish a basement or redo a kitchen/bathroom, redo the foor, new windows, etc it can make a lot of sense to add those costs to your mortgage instead of carrying the cost on credit cards and lines of credit.

How does the process work?

Once you have found a home, you need to obtain quotes from contractors on the renovation you plan, outlining the scope and all costs. These are provided to the mortgage lender. Depending on the scope of the work required and the costs, an appraisal may be required to ensure the improvements increase the value of the home.
The mortgage lender will add the estimated cost of the renovations to your mortgage. Keep in mind your down payment will be based on the total cost, so if you are putting 5% down, that will be 5% of the purchase plus renovations. At closing, the lawyer will release the funds to purchase the home, but the renovation funds are held in a trust with the lawyer until the work has been completed.
Once an inspection from an appraiser confirms all work is complete, the balance of the mortgage funds will be released to you. There are a few options for carrying your expenditures until the funds can be released.

Not all renovations qualify

We’ve encountered this issue a few times: unfortunately, that long-awaited hot tub cannot be included in a purchase plus improvements mortgage. Remember, any removable item, like kitchen appliances or a washer/dryer, cannot be added in.

The intended renovation must increase the home’s value by the amount of the borrowed renovation funds. For example, if you’re buying a home for $500,000 and providing $25,000 in contractor quotes, the as-completed value must be $525,000. Sometimes, this is confirmed by an appraisal.

Important notes

Firm quotes are essential before finalizing your mortgage.
All work must be completed and reviewed by the mortgage lender before any funds are released.
Some lenders require renovations to be completed within a specific timeframe. If renovations may take longer than three months, it’s important to note this, as it will help us determine the best lender for your needs.
Typically, the maximum amount you can borrow for improvements is 10% of the purchase price or $40,000, whichever is less. However, if the renovation makes sense, we can request an exception to increase this amount.
The funds must be used for the work outlined in the initial quotes. Changing the scope of the work afterwards risks the mortgage lender not releasing the funds which are added back to the mortgage.