Purchase Plus Improvements Programs
How to Turn a Fixer-Upper Into Your Dream Home
May 2026 | Purchase Plus Improvements Programs
Finding your dream home in the Edmonton area can feel like searching for a needle in a haystack. But what if the perfect house is hiding under outdated finishes and old carpet? A fixer-upper might be your ticket to homeownership, and with the right financing strategy, you don’t need tens of thousands sitting in the bank to make it happen.
The Dilemma: Great Bones, Not-So-Great Budget
Picture this: You’ve found a fantastic home in a desirable Edmonton neighbourhood for $600,000. The location is perfect, the layout works for your family, and the structure is solid. There’s just one catch: it has a dated kitchen and 30-year-old flooring that desperately need updating.
You estimate you’ll need about $40,000 to bring the home up to your standards. But like most homebuyers, you’re already stretching to cover your down payment and closing costs. Where’s that extra $40,000 supposed to come from?
Your Two Options
Option 1: The Traditional Route
Buy the home, move in, and save up to renovate over time. This means living with that avocado-green countertop and worn-out carpet for months (or years) while you accumulate the cash. You might consider a personal loan or line of credit, but those typically come with higher interest rates than your mortgage.
Option 2: Purchase Plus Improvements
This is where smart financing comes into play. Purchase Plus Improvements programs, offered through major Canadian mortgage insurers (CMHC, Canada Guaranty, and Sagen), allow you to roll your renovation costs directly into your mortgage from day one.
The Benefits of Creating Value
➤ Customize to Your Taste: Choose finishes, colours, and materials that reflect your style
➤ One Low Interest Rate: Renovation costs are financed at your mortgage rate, not a higher personal loan rate
➤ Immediate Livability: Move into a home that’s already updated and comfortable
➤ Built-In Equity: A $40,000 investment often creates more than $40,000 in home value
➤ Competitive Edge: You can make offers on homes other buyers might overlook
What Renovations Qualify?
Most permanent improvements to the property are eligible, including:
➤ Kitchen and bathroom updates
➤ Flooring replacement
➤ Roof repairs or replacement
➤ Furnace or HVAC upgrades
➤ Window and door replacements
➤ Accessibility modifications
➤ Basement finishing
➤ Electrical or plumbing updates
Luxury items like pools, hot tubs, and landscaping typically don’t qualify, as lenders focus on improvements that add functional value.
Is This Right for You?
➤ You’ve found a home with solid structure but cosmetic issues
➤ You want to customize your space from the start
➤ You’d rather invest in creating value than paying a premium for someone else’s upgrades
➤ You have reliable contractors and realistic renovation timelines
➤ You’re purchasing in a market where renovated homes command higher prices
Frequently Asked Questions (FAQ) for Purchase Plus Improvements Programs
Q1: Do I need perfect credit to qualify for Purchase Plus Improvements?
While you do need to qualify for mortgage default insurance (required when your down payment is less than 20%), the credit requirements are the same as a standard insured mortgage purchase. Your mortgage broker can help you understand if you meet the criteria.
Q2: What if the renovations cost more than expected?
It’s crucial to get accurate contractor quotes upfront and build in a contingency buffer. Once your mortgage is approved, the renovation amount is fixed, you’ll need to cover cost overruns yourself. This is why working with experienced contractors and getting detailed estimates is essential.
Q3: Can I do the renovations myself to save money?
Some lenders may allow owner-completed work, but most require licensed contractors for quality assurance and proper fund disbursement. Always check with your lender about their specific requirements before planning DIY projects.
Q4: How long do I have to complete the renovations?
Typically, you’ll have 90-120 days from closing to complete all renovation work. Extensions may be possible in some cases, but timelines are important, work with contractors who can meet the deadline.
Q5: Will I pay mortgage default insurance on the renovation amount too?
Yes, the insurance premium is calculated on the total mortgage amount, including the renovation holdback. However, you’re still financing everything at a lower interest rate than alternative renovation financing options.
Q6: What happens if I can’t finish the renovations in time?
This varies by lender, but generally, unused funds may need to be returned and applied to your mortgage principal, or you may need to complete the work at your own expense. Planning properly with realistic timelines is critical.
Q7: Can I use Purchase Plus Improvements for investment properties?
This program is primarily designed for owner-occupied properties. Multi-unit properties where you’ll live in one unit may qualify, but pure investment properties typically don’t.
Q8: How is the renovation money released?
Funds are held in trust and released in stages as work is completed. Your lender will typically require progress inspections and proof of work (photos, receipts, contractor invoices) before releasing each draw.
Q9: Is Purchase Plus Improvements available throughout the Edmonton area?
Yes! This program is available across Canada, including Edmonton, Sherwood Park, St. Albert, Fort Saskatchewan, and all surrounding communities.
Q10: What if the appraisal doesn’t support the purchase price plus renovations?
The lender will order an “as-improved” appraisal that estimates the home’s value after renovations are complete. If the appraisal comes in lower than expected, you may need to adjust your renovation budget or increase your down payment.
