Purchase Plus Improvements Mortgage: A Comprehensive Guide for Alberta Homebuyers

A Purchase Plus Improvements Mortgage lets you roll renovation costs into your mortgage—so you can buy and upgrade your home in one smart move. Perfect for Alberta buyers who want more home, right from day one.

Many homebuyers find the perfect home—except it needs a few upgrades right away. Instead of turning to credit cards or dipping into your investments, a Purchase Plus Improvements mortgage lets you roll those renovation costs into your mortgage from the start. It’s a smart, flexible way to finance the upgrades your new home needs.

What is a purchase plus improvement mortgage?

A Purchase Plus Improvements (PPI) mortgage allows homebuyers to finance both the purchase of a property and the cost of eligible renovations through a single mortgage. This solution is ideal for properties that are structurally sound but require updates to meet the buyer's preferences or needs.

Eligibility Criteria

Property Types:

Maximum of four units, with at least one unit occupied as the principal residence.
Applicable to both new constructions and existing properties

Down Payment Requirements:

Minimum 5% down payment on the first $500,000 of the lending value.
10% down payment on the portion exceeding $500,000.
For 3-4 unit properties, a minimum of 10% down payment is required.

Renovation Cost Limits:

Typically, renovations should not exceed 20% of the property's purchase price or $40,000, whichever is less.
Some lenders may allow higher amounts, up to $100,000, but this is subject to stricter conditions and limited lender options.

Eligible Renovations

Renovations must be permanent and add value to the property. Common eligible improvements include:

Kitchen and bathroom upgrades
Flooring replacement
Roof repairs or replacement
Window and door replacements
Basement finishing
Energy-efficient upgrades like insulation or solar panels

Note: Cosmetic changes or additions that do not add value, such as purchasing appliances or furniture, are typically not eligible

Application Process

Pre-Approval: Obtain a mortgage pre-approval to determine your maximum purchase and renovation budget
Property Selection: Find a suitable property that requires renovations
Contractor Quotes: Obtain detailed quotes from licensed contractors for the planned renovations
Mortgage Application: Submit the purchase and renovation details to your lender for approval
Closing: Upon approval, proceed with the property purchase
Renovation Completion: Complete the renovations within the stipulated timeframe, usually 90-120 days
Inspection and Fund Release: After renovations, the lender may require an inspection before releasing the renovation funds

Tips for a Smooth Experience

Timely Coordination: Ensure that contractor quotes are obtained promptly to avoid delays in mortgage approval.
Budgeting: Be prepared to cover renovation costs upfront, as funds are typically reimbursed after completion.
Documentation: Keep all receipts and documentation related to the renovations for lender verification.
Professional Guidance: Work with a mortgage broker experienced in PPI mortgages to navigate the process efficiently.

Ready to Transform Your Dream Home?

If you're considering purchasing a property in Alberta that requires renovations, a Purchase Plus Improvements mortgage could be the perfect solution. Let's discuss how this option can work for you