What is a Purchase Plus Improvements?
So you found your dream home… almost? The location, size, and style are everything you wanted but the bathroom is dated… or the basement is unfinished… or you need new windows & doors.
Welcome to the program called Purchase Plus Improvements.
The first step in buying a home is getting pre-qualified to know your maximum purchase price.
Let’s say you’ve already gone through the pre-qualification process and your maximum purchase price is $450,000.
You’re house shopping and you find the almost perfect home and get an accepted offer for $420,000.
Before closing, on one of your pre-close walkthroughs, you get a contractor in there and they write you a quote for the improvement you wanted. Let’s say it’s $30,000.
Since you qualified for $450,000, you could qualify for the $420,000 purchase plus $30,000 renovation, acting like a total purchase of $450,000.
Downpayment, mortgage amount, and CMHC premiums are calculated like it’s a $450,000 purchase.
The legal transaction is still treated like a $420,000 purchase, and the additional $30,000 is held back at the lawyer.
Once you complete the renovations after closing (most lenders want this done within the first 6 months), you provide proof in form of a new appraisal or the invoices, and the lender then releases the held-back funds to you!
You get the home you want, just as you want it!
