What is a Purchase Plus Improvements Mortgage?

A Purchase Plus Improvements Mortgage is a mortgage product that allows homebuyers to finance the cost of renovations or upgrades along with their home purchase.

Why Do Purchase Plus Improvement Mortgages Matter in Real Estate

This type of mortgage is particularly valuable for buyers who purchase a home that needs immediate updates—such as a new roof, flooring, or kitchen renovation—but may not have upfront cash available for improvements.

• The buyer gets pre-approved for a total mortgage amount that includes the home's purchase price and the estimated cost of improvements.
• After closing, the renovation funds are held in trust.
• The buyer must complete the improvements within a specific timeframe (usually 90–120 days).
• Once the renovations are verified (with invoices or inspections), the lender releases the funds.

• Renovations must increase the home's value or functionality
• Quotes or plans must be submitted in advance
• Final mortgage approval is conditional on the scope and completion of the work

Understanding this mortgage option gives buyers more flexibility and purchasing power, especially in markets where move-in-ready homes are out of budget.

Example of a Purchase Plus Improvements Mortgage in Action

A couple buys a $500,000 home and adds $40,000 in approved renovations. Their total mortgage is $540,000 under a Purchase Plus Improvements program.

Key Takeaways

• Combines home purchase and renovation costs.
• Funds released after upgrades are completed.
• Requires quotes and lender approval.
• Useful for buying homes that need work.
• Helps buyers afford both purchase and repairs.

Related Terms

• Mortgage Pre-Approval
• Home Renovation Loan
• CMHC Insurance
• Mortgage Financing Options
• Improvement Quotes