Insight from a Mortgage Broker

If you're buying a home that needs some upgrades, the Purchase Plus Improvements program can help you finance renovations as part of your mortgage. You may be eligible to receive up to $40,000 for improvements, though some lenders cap this at 10%-20% of the purchase price. While this program is designed for cosmetic upgrades like kitchen or bathroom renovations, it generally does not cover major structural repairs such as foundation issues or septic system replacements. If a home has significant damage—like missing flooring or large drywall holes—lenders may not approve the mortgage unless the seller completes the repairs before closing.

To qualify, you'll need to provide contractor quotes upfront. The mortgage approval process cannot begin until these are submitted, so it’s important to get them as early as possible. This amount is then added to your mortgage. Items like appliances or removable upgrades that don’t increase the home’s value are typically not eligible.

Once your mortgage is finalized and the sale closes, you will have 120 days to complete the renovations using your own funds.

After the work is completed, you’ll need to provide paid invoices or an inspection report (at your cost) to confirm that the work was done as planned.

Once the lender approves the completed renovations, the funds will be released to you through your lawyer, reimbursing you for the renovation costs.

Some lenders now offer up to $100,000 in renovation financing, with options for multiple draws throughout the renovation process. One of the most exciting new features is the ability to use these funds to build an income suite—a separate rental unit within your home. Even better, lenders may allow you to include the projected rental income from the suite in your mortgage qualification, which could help you afford a higher-priced home.

For example, if you qualify for a $400,000 home but want to add a $100,000 rental suite that could generate $2,000 per month in rent, that extra rental income could allow you to qualify for the additional $100,000 in financing. Since every $100,000 borrowed costs around $550 per month in mortgage payments, the rental income could significantly reduce your out-of-pocket costs. If your original budget allowed for a $2,200 monthly mortgage payment, adding a rental suite would increase your total payment to $2,750 per month. However, with $2,000 in rental income, your net mortgage payment could drop to just $750 per month—far lower than it would be without the rental suite.

Additionally, Nova Scotia’s Secondary and Backyard Suite Program offers up to $40,000 to help homeowners create rental units, making this option even more attractive. However, this program does have rental restrictions that should be considered. Combining multiple programs like these can be complex but highly beneficial with proper planning.

If you’re thinking about purchasing a home that could benefit from renovations or an income suite, ensure you talk to a mortgage broker to explore your options!