Found a Fixer-Upper? Roll the Reno Into Your Mortgage With a Purchase Plus Improvements Loan
One loan, one rate, buying and renovating combined — but the reno money is "advance-then-reimburse," so know the traps first
What is a Purchase Plus Improvements mortgage, and how does the reno get into the loan?
A Purchase Plus Improvements (PPI) mortgage lets you roll renovation costs into your mortgage when buying a resale home — one loan, one rate, one payment covering both the purchase and the upgrades. The key mechanic: the lender appraises and lends on the home’s “as-improved” value, and the renovation funds are held back and released to you only after the work is completed, invoiced, and verified. Per CMHC / Sagen and other insurers, the improvement amount is usually capped (a common rule is the lesser of $40,000 or 20% of value; CMHC Improvement caps at 10% of as-improved value, Sagen / Canada Guaranty up to 20%).
Sources: CMHC / Sagen / Canada Guaranty (Purchase Plus Improvements product rules, as-improved appraisal, improvement caps and completion timelines); mortgage rate vs personal-loan/credit-card rate comparison (mid-2026 market).
When a client loves a well-located home with a dated kitchen and baths, they ask: “if I buy it, where’s the reno money?” Many don’t know there’s a mortgage product built for exactly this: Purchase Plus Improvements. It finances the reno at mortgage rates — far cheaper than credit cards or a personal loan. But it has a key mechanic: the money is “advance-then-reimburse,” and missing that strains your cash flow. Here’s the mechanics, caps, and traps.
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The mechanic: lend on "as-improved" value, reno folded into the mortgage
⚠️The reno money isn’t yours at closing — you have to front it. The lender holds the reno funds until the work is done and verified. Before using PPI, confirm you have bridge cash, or a contractor who’ll be paid on completion — otherwise the work stalls and the funds don’t flow.
The big trap: the reno money is advance-then-reimburse
The cap: the improvement amount is limited
ℹ️Have your quotes ready at the offer stage. The lender lends on “as-improved” value and needs concrete reno quotes/plans to support that valuation. So get written contractor quotes when you make the offer and arrange financing — the process runs smoother that way.
Payout and timeline: one draw vs progress draws
Why it’s worth it: mortgage rate vs other ways to finance a reno
Frequently Asked Questions
Do I get the Purchase Plus Improvements money at closing?
No. The reno funds are held back — you front the cost to complete the work, provide invoices, and the lender releases the funds only after verifying completion. Confirm you have bridge cash before using it.
What’s the maximum reno amount?
It’s capped and varies by insurer: a common rule is the lesser of $40,000 or 20% of value; CMHC Improvement is 10% of as-improved value, Sagen / Canada Guaranty up to 20%. It suits moderate renos — confirm your lender’s program.
Why use PPI over a credit card or personal loan?
Because the reno is financed at mortgage rates (~4–5%), far below a personal loan (8–10%), credit cards (~20%), or a HELOC (~6–7%). On tens of thousands repaid over years, the spread is substantial.
Is there a deadline for the renovation?
Yes. Per Canada Guaranty / CMHC, projects under $40,000 must typically be completed within 90 days (Canada Guaranty) or 120 days (CMHC), with invoices kept. Align your contractor’s timeline and payment schedule accordingly.
Arthur Zhao
Real Estate Broker · FRI · ABR · SRS · PSA · MCNE · E-PRO · CLHMS & GUILD Elite · REAIS
VP & Branch Manager, Bay Street Group Inc.
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