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Purchase plus improvements is a mortgage option that lets a buyer finance the cost of planned renovations into the same mortgage used to buy the home, based on the property's expected value after the improvements are complete.
The buyer submits renovation quotes, and the lender arranges an appraisal that estimates the property's “as-improved” value once the work is done. The additional renovation funds are typically held back and released after the work is completed and confirmed — similar in spirit to how a construction (draw) mortgage releases funds against progress.
This option can apply to both insured and uninsured purchases; on an insured mortgage, it's also subject to the mortgage insurer's own program limits and eligible improvement types. Buyers who already own the home and want to fund renovations afterward would instead look at a refinance.
Funds are typically held back: renovation dollars are usually released only after the work is completed and confirmed, often through a follow-up appraisal or inspection.
Available on insured purchases: the program can apply to insured as well as uninsured purchases, subject to the mortgage insurer's specific limits and eligible improvement types.
Different from a ground-up build: it's built around an existing, largely complete home rather than new construction, unlike a construction (draw) mortgage.
Refinancing is the after-the-fact alternative: homeowners who already own the property and want to fund renovations later typically use a refinance instead.
Definitions reflect Canadian federal and provincial rules as of the “Updated” date above. Not advice for any specific file.
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