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Purchase Plus Improvements: Everything You Need to Know

If you’re looking to find an affordable home, and open to the idea of renovating, this is a great program for you. It’s used for purchasing homes that need a little TLC—whether it’s in the kitchen, basement, flooring, or insulation.

With this program, you’re given the opportunity to purchase a home with the cost of renovations included in the price.

How Does the Program Work?

This program, offered by mortgage insurers like The Canadian Mortgage and Housing Corporation (CMHC,) and Genworth Canada helps qualified buyers borrow up to 10% of the house’s post-renovation value and include it in their mortgage amount. This money is then used to cover the cost of renovations.

It’s important to note that the program doesn’t cover the cost of appliances—these are not considered to be part of the physical structure of the home. Lenders will not finance renovations that involve significant rebuilding, like adding on a basement, or pay to have standard home systems like a furnace fixed or maintained.

How Do You Qualify?

To qualify for the CMHC Improvements program, buyers must provide a quote from their contractor, including all projected costs associated with the renovation, when they submit their application to the lender. Standard income and employment requirements also apply.

Once your renovation amount is approved by CMHC, the money is added to your mortgage loan. You will not receive the funds, however, until the renovations are finished. Renovations can begin as soon as you take possession of your new home.

To pay for the renovations up front, you may want to consider taking out a loan, or putting certain funds aside ahead of time in preparation. When the renovations are complete, a final inspection is required to ensure that the renovations have been properly performed. Your lawyer will be given instruction by the lender to release the money for the renovations.

In the past, you may have overlooked homes that needed a little TLC. Now, with programs like CMHC Improvements, you can broaden your house-hunting horizons. You have the opportunity to renovate and decorate your new home exactly the way you envisioned it.

There are many variations to this program, and it helps to have a mortgage professional to give you sound advice.

If you are considering applying for this program, the knowledgeable professionals at Mortgage West - The Mortgage Centre can provide you with valuable advice to help guide you through the process. Contact Rose Blankenagel today for more information.