Mortgage options
Buy the almost perfect home. Then make it perfect.
You found the place: right street, right layout, right price. But the kitchen is from 1987. A purchase plus improvements mortgage rolls the renovation into your financing, so you do not walk away from the right home over the wrong finishes.
How a purchase plus improvements mortgage works
Picture this: you have been running around with your very patient realtor for months, trying to find your dream home. You find the almost perfect place, except the kitchen is hideous. Do you really want to walk away when all the other boxes are checked? With purchase plus improvements, you do not have to.
The lender advances funds for the improvements as part of your mortgage, with as little as 5% down on the combined amount. You provide quotes for the work as part of the approval. On closing, your lawyer holds back the improvement funds. Once the work is complete and the lender has confirmed it, usually with a follow-up inspection, the funds are released to pay your contractors.
Because the improvement money arrives after the work is done, it helps to have a line of credit or savings to cover deposits and materials in the meantime. The improvements must add value to the home, and the property has to be structurally sound to begin with. Tisha has used this product for kitchens, bathrooms, flooring, windows, roofs and basement finishes, and she will tell you quickly whether your plan fits.
"Do not walk away from the right house over the wrong kitchen. We can finance the fix."
Who this is for
When purchase plus improvements fits
The dated but solid home
Good bones, tired finishes. The classic case for this product.
Buyers priced out of move-in-ready
Lower-priced homes that need updates become realistic when the renovation is financed at mortgage rates.
Accessibility updates
Main-floor bathrooms, ramps and wider doorways for a family member.
Energy and efficiency work
Windows, insulation, furnace and roof. Improvements lenders readily recognize as value-adding.
Investors adding value
Owner-occupied multi-unit purchases where the second unit needs finishing.
First-time buyers
Combine the program with first-time buyer incentives. See the first-time buyer page.
How it works
The process, start to finish
- 01
Quotes and approval
Contractor quotes go in with your application. The lender approves the purchase price plus the improvement amount.
- 02
Closing with a holdback
Your lawyer holds the improvement funds in trust. You take possession and the work begins.
- 03
The work gets done
Usually within 90 to 120 days of closing, depending on the lender. Tisha keeps you on top of the deadline.
- 04
Funds released
An inspection confirms the work, the lender signs off, and your lawyer pays out the holdback.
How much can I add for improvements?
Most lenders cap the improvement portion at a percentage of the purchase price, commonly around 10% to 20%, and sometimes at a dollar maximum. The exact limit depends on the lender and insurer; Tisha will confirm the number for your purchase.
Can I do the work myself?
Generally the lender wants licensed contractor quotes, and the holdback is released based on completed work verified by an inspection. Some lenders allow materials-only quotes for sweat equity. Ask Tisha before you plan on DIY.
What if the renovation costs more than the quote?
The lender only releases the approved amount. Any overage comes from your own funds, which is another reason to keep a line of credit available during the project.
Does the home need to be in good condition to qualify?
Yes, structurally. This product is for homes that are sound but need updating, not for properties that are unsafe or uninhabitable at purchase.
Related mortgage options
Free consultation
Found the almost-perfect home? Let's price the plan to fix it.
Tell Tisha what you are trying to do and she will come back with options, not a sales pitch. Free, no obligation, no credit check to start.
- Over 20 years in retail banking
- Former mortgage underwriter: she knows what lenders want
- Banks, credit unions, monoline and alternative lenders
- Lender-paid on most residential mortgages