by Sandy MacKay
A buyer approved at $700,000 walked into my office this spring convinced she could only shop finished homes. She left looking at a $550,000 fixer with a plan to finance roughly $90,000 of work straight into the mortgage. Purchase Plus Improvements made that possible, and it is the most underused tool I know in this market.
Here is the mistake almost everyone makes. They take their approval number and search only for move-in-ready homes under it. So does every other buyer at that price. You end up fighting the same crowd for the same updated kitchens while the place two doors down with the ugly carpet and the 1980s bathroom sits for 40 days because nobody can picture it done.
How the Program Actually Works
Purchase Plus Improvements lets you roll renovation costs into your mortgage at the time of purchase, including on an insured mortgage with as little as five percent down. You buy the $550,000 house, you get quotes for the work before your offer is firm, and the lender advances the renovation money based on the improved value once the work is verified. The math that matters: instead of buying a $650,000 finished home and competing hard for it, you buy at $550,000 and direct $100,000 toward exactly the finishes you want. You control the outcome, and you often build equity the day the work is done.
Most agents quietly steer first-time buyers away from this. It means more coordination and more work for the agent. I think that is doing the client a disservice, and I will say so to any of them. Done right, this is how a young buyer or a house hacker gets into a better property than their pre-approval suggested on paper.
Where It Goes Wrong
This is not a licence to buy any wreck. It goes sideways when the renovation scope is fuzzy, the contractor pricing is soft, or the timeline does not line up with the lender's draw schedule. You need real quotes, not napkin math. Line up a contractor who will stand behind a number. Finished homes attract crowds. And the deal has to make sense before you remove conditions, never after.
The current market actually helps here. With Ontario sitting at 67,038 active listings at the end of April, the highest April in over a decade, there are more of these overlooked properties than there have been in years. More inventory means more homes other buyers skip because they cannot see the finished version. That is your opening. The Bank of Canada holding at 2.25% on June 10 gives you a steady payment to plan against while you do it.
Why I Am Building a Plan Around This
We hosted about 50 buyers at Nickel Brook Brewery in Burlington recently, and the questions kept circling back to the same thing. People are not chasing hype. They want a clear plan for getting in. Purchase Plus Improvements is a big piece of that plan, which is why we are connecting the financing, the contractor pricing, and the property search into one process instead of three confusing ones. The value-add discipline is the same one I use on Hamilton investment purchases: know the numbers cold before the offer is firm. For the program rules themselves, CMHC is the authority worth reading.
What to Do Before You Shop
Get pre-approved and ask your broker specifically about Purchase Plus Improvements capacity, not just your purchase ceiling. Line up a contractor who can quote fast. Then start looking at the homes everyone else scrolls past. A good starting point is a real read on your numbers and your buying power, which you can begin with our property and budget evaluation tool.
Questions Buyers Ask About Purchase Plus Improvements
How does Purchase Plus Improvements work in Ontario?
You buy a home that needs work and finance the renovation cost into your mortgage at closing. You provide contractor quotes before firming up, the lender approves based on the improved value, and the reno funds release once the work is verified. It works on insured mortgages with as little as five percent down.
How much can I add for renovations?
It depends on your lender and the improved value of the home, but adding $40,000 to $100,000 is common. The renovations have to be permanent improvements that raise the property value, like kitchens, bathrooms, flooring, or windows, not furniture or quick cosmetic fixes that do not add lasting value.
Is Purchase Plus Improvements worth it for a first-time buyer?
Often, yes. It opens up homes other buyers ignore, lets you finish a place to your taste, and can build equity right away. The trade-off is coordination. You need firm quotes and a reliable contractor before your offer goes firm, so it pays to work with people who have done it before.
I have run this play enough times to know where it helps and where it does not, and you can read my story first. If you are buying this year and your approval feels tight, this is the conversation that changes what is possible.
