Can You Add Renovation Costs to Your Mortgage?

Sometimes the right home just needs a few upgrades — maybe it’s an older kitchen, an unfinished basement, or a property that checks most of the boxes but needs some work to really feel like home.

The good news is there’s a mortgage option that might help with that.

It’s called a Purchase Plus Improvements mortgage. It allows you to finance the purchase of a home and certain approved renovations all under one mortgage, so you don’t need to come up with the cash upfront or rely on credit cards or lines of credit after closing.

How It Works

Here’s the general idea:

• You make an offer on a home and get it accepted

• You collect quotes for the upgrades you want to make

• The lender reviews and approves the mortgage including the renovation costs

• After closing, you complete the renovations

• Once the work is verified, the lender releases the funds

The upgrades typically need to be permanent improvements to the property and completed by a professional. Each lender has their own guidelines for what qualifies.

Real-Life Scenarios

Scenario 1: A couple finds a home in a great neighbourhood, but the basement is unfinished. With a Purchase Plus Improvements mortgage, they’re able to include the cost to finish the basement in their mortgage and still keep their monthly payments manageable.

Scenario 2: A buyer wants to convert part of the basement into a rental suite. Some lenders may allow the cost of that renovation to be added to the mortgage — and in some cases, may even use projected rental income to help with the approval.

What You Can Include

Every lender has their own rules, but common upgrades might include:

• Kitchen or bathroom renovations

• Flooring, drywall, or interior paint

• Finishing a basement

• Fencing or a garage

• Windows 

Why Consider It

This mortgage option could make more homes fit your needs, especially in a competitive market. Instead of limiting your search to move-in ready properties, you can look at homes with potential and still stay on budget.

It may also save you from using high-interest credit or draining your savings after closing.

Final Thoughts

If you’re open to doing a bit of work after moving in — or just want the flexibility to turn a good house into a great one — a Purchase Plus Improvements mortgage might be worth exploring.

[Click link to apply or learn more]