You've found a house that's perfect—except the kitchen is from 1985 and the bathroom needs a full gut. Instead of buying and then scrambling for a renovation loan, the Purchase Plus Improvements (PPI) program lets you roll renovation costs directly into your mortgage at the same low rate.
How Purchase Plus Improvements Works
The PPI program adds your planned renovation costs to the mortgage amount:
| Component | Amount |
|---|---|
| Purchase price | $500,000 |
| Renovation budget | $40,000 |
| Total mortgage basis | $540,000 |
| Down payment (5%) | $27,000 |
| Mortgage amount | $513,000 + CMHC |
You get one mortgage, one rate, one payment—and the renovation is financed at mortgage rates (4–6%) instead of personal loan rates (8–15%).
Eligibility Requirements
Property types: Single-family homes, condos, duplexes (owner-occupied)
Maximum renovation amount: Typically 10–20% of the "as-improved" property value, depending on the lender
Renovation types allowed:
- Kitchen and bathroom upgrades
- Flooring, painting, fixtures
- Roof replacement
- Windows and doors
- Basement finishing
- HVAC upgrades
- Accessibility modifications
Not allowed:
- Luxury additions (pools, hot tubs)
- Landscaping beyond basic grading
- Furniture or appliances (some exceptions)
- Structural additions in some cases
Which renovations add the most value
The Step-by-Step Process
- Get pre-approved for the total amount (purchase + renovations)
- Obtain renovation quotes from licensed contractors (2–3 quotes recommended)
- Submit quotes to lender during mortgage application
- Lender orders appraisal based on "as-improved" value
- Close on the property — renovation funds held in trust
- Complete renovations within 90–120 days of closing
- Lender inspects and releases remaining funds to contractor
Important Rules
Holdback: The renovation portion is held back at closing and released in stages (or upon completion). You may need to front some costs.
Timeline: Most lenders require renovations completed within 90–120 days. Extensions are possible but not guaranteed.
Contractor requirements: Licensed, insured contractors only. DIY work is generally not eligible.
Inspection: The lender (or insurer) will verify the work matches the quotes before releasing final funds.
PPI vs. Other Renovation Financing
| Option | Rate | Max Amount | Pros | Cons |
|---|---|---|---|---|
| PPI | 4–6% | 10–20% of value | Lowest rate, one payment | Must plan before closing |
| HELOC | Prime + 0.5–2% | 65% of equity | Flexible, revolving | Need existing equity |
| Personal loan | 8–15% | $50K typical | Quick approval | Expensive |
| Credit cards | 20%+ | Varies | Immediate | Very expensive |
Making PPI Work for You
The Purchase Plus Improvements program is one of the most underused tools in Canadian mortgage financing. If you're considering a property that needs work, talk to your broker about PPI before making an offer—it could open up properties you'd otherwise pass on.
Planning a Reno Purchase?
We'll structure your PPI mortgage to cover both the home and the upgrades.
