Purchase plus improvements · renovation mortgage · fixer-upper · as-improved value · holdback · Poly-B · Calgary & all of Alberta
Purchase plus improvements mortgages in Calgary: put the renovation in the mortgage
Found a house that needs work, and you don’t have the renovation money on top of the down payment? Here’s how big the job can be, when the money arrives, and what it cost on a real Calgary purchase.
About 20 minutes, no credit check to start, no obligation. Or call (403) 241-3255.
Josh Tagg is a Calgary mortgage broker who arranges purchase plus improvements mortgages for Albertans buying a home that needs work. He leads the Mortgages for Less team at INDI Mortgage, has been arranging mortgages in Alberta since 2006, took over the brokerage his father founded in 2003, and is licensed by the Real Estate Council of Alberta. What’s different about how he runs one: he checks the size of the job against each lender’s improvement limit before you write the offer, and plans how the contractor gets paid before the holdback is released. That’s where these files go wrong, two weeks before closing. Book a call, apply online, or phone (403) 241-3255.
The 95%, 10% and $1.5M figures are from CMHC’s published rules for CMHC Improvement. The file figures are from a Calgary purchase that closed on September 1, 2023. Insurer and lender rules change, so ask for today’s.
Can you add renovation costs to your mortgage when you buy?
Yes. It’s called a purchase plus improvements mortgage, or purchase plus. Instead of lending on the price alone, the lender adds the quoted cost of the work and lends against what the home will be worth once it’s done, the as-improved value. You get a single mortgage, at a mortgage rate, for the house and the renovation.
Under CMHC’s rules, the lending value is the lower of the appraiser’s as-improved value or the as-is value plus the cost of the work, and you’ll need documents to support it: a list of the improvements and cost estimates, plans for a major renovation, or a building permit (CMHC). In practice that means written quotes from your contractors before the mortgage is approved.
How big can the renovation be?
This is the question most pages skip. There are two limits, the insurer’s and the lender’s.
The insurer’s. CMHC insures up to 95% of the as-improved value on a one- or two-unit home you’ll live in, and up to 90% on three or four units. The as-improved value has to be under $1,500,000. And the size of the job decides how the money is paid out: improvements of 10% or less of the as-improved value are paid in a single advance, and anything over 10% is paid in progress advances as the work is done (CMHC).
The lender’s. Each lender sets its own cap on top. Some limit the improvements to 10% of the as-improved value and don’t do progress advances at all. Others allow more. Some take cosmetic work only and exclude structural work or additions. So two lenders can give two different answers on the same house, and the size of your job decides where the file should go.
Worked example: a $450,000 house that needs $60,000 of work
Say you’ve found a $450,000 house in Calgary that needs $60,000 of work, and you don’t have the $60,000 on top of the down payment. This is our own arithmetic on CMHC’s published rules, assuming the appraiser agrees the work adds its full cost in value:
| Item | Buy as-is | With the work added |
|---|---|---|
| Value the lender uses | $450,000 | $510,000 |
| Minimum down payment (5% of the first $500,000, 10% above) | $22,500 | $26,000 |
| Mortgage before the premium | $427,500 | $484,000 |
| Default insurance premium, 4.00% (90.01–95% band) | $17,100 | $19,360 |
| Total mortgage | $444,600 | $503,360 |
| Cash you need for the renovation after closing | $60,000 | $0 |
Three things follow from those numbers.
- The down payment goes up a little, not by the cost of the work. Because the minimum is on the as-improved value, you’d put down $3,500 more, not $60,000 more. The premium rate comes from CMHC’s published table (CMHC).
- $60,000 is over the 10% line. It’s 11.8% of the $510,000 as-improved value, so under CMHC’s rules it’s paid in stages as the work goes, not in one advance at the end.
- A 10% lender can’t do it. On a $450,000 house, 10% of the as-improved value tops out at $50,000 of work ($50,000 is 10% of $500,000). For the full $60,000, the file has to go to a lender that allows a larger share. That’s the check to make before you write the offer, not after.
A real Calgary purchase: Poly-B out, $28,734 in the mortgage
A couple moving back to Calgary found the house they wanted: an $870,000 five-level split built in 1996, in an established inner-city neighbourhood. It still had its original Poly-B water lines. As Josh puts it, insurers and lenders require Poly-B to come out, so replacing it came with the house. Instead of paying the plumber, drywaller and painter out of savings right after closing, they put the quoted work into the mortgage.
| Item | Amount |
|---|---|
| Purchase price | $870,000 |
| Quoted work: Poly-B to PEX, drywall repair, interior paint | $28,734 |
| Value the lender used | $898,734 |
| Down payment, 10% | $89,873 |
| Default insurance premium, 3.10%, added to the loan | $25,075 |
| Total mortgage | $833,936 |
| Extra monthly payment for the work (4.34%, 5-year fixed, 25 years) | about $145 |
The work was about 3% of the as-improved value, well under the 10% line, so the lawyer held back the $28,734 on closing and it was released in one advance once the job was finished. They got the keys on September 1, 2023, and the drywall and painting were invoiced by mid-October. The 10% down payment on the as-improved value cost them $2,873 more at closing than 10% of the price. One thing went over: the painting came in about $2,780 above its quote, and that was theirs to pay. Read the full case study.
When do you get the renovation money?
After the work, not before. This is the part that catches buyers who have no cash left after the down payment, and it’s the first thing to plan.
- On closing, the lawyer holds back the improvement money instead of paying it out.
- Once the work is done, the lender checks it, usually through an inspection or the appraiser’s confirmation and the contractor’s invoice, then releases the money.
- On a bigger job, over 10% of the as-improved value under CMHC’s rules, the money is released in stages as the work progresses instead of all at the end.
Until then, someone carries the cost. Ask your contractor up front whether they’ll wait for the holdback or work on draws. If they want a deposit, plan where it comes from. A purchase plus mortgage covers the renovation, but it doesn’t pay the contractor on day one.
What can and can’t go into the mortgage?
- Can: work that adds value to the home and is backed by written quotes, such as plumbing (including Poly-B replacement), flooring, kitchens, bathrooms, paint and windows.
- Can’t: furniture, appliances you’d take with you, or anything that isn’t part of the house.
- Depends on the lender: structural work, additions and large renovations. Some lenders take cosmetic work only, and some won’t do progress advances.
- Overruns: only the quoted amount goes into the mortgage. If the job costs more, you pay the difference.
What happens, step by step?
- Before you write the offer: tell us the price and a rough cost of the work. We check which lenders’ limits fit the job and whether it would be one advance or staged.
- Get written quotes from your contractors, itemized, with GST. Put a financing condition in the offer that gives you time to get them.
- Apply. The lender orders an appraisal of the as-is and as-improved values and approves the mortgage on the as-improved figure.
- Closing. The lawyer pays the seller and holds back the renovation money.
- Do the work, then the lender checks it and releases the holdback, in one payment or in stages.
When is purchase plus the wrong tool?
When you have the cash and would rather not pay interest on the renovation for 25 years. When the work can wait until you’ve built some equity, so a home equity line of credit or a refinance can pay for it later (see renovation loans and HELOCs for first-time buyers). When the job is bigger than any lender’s cap for that house, or the as-improved value would go over $1,500,000 and insured financing isn’t available. Or when the house needs so much work that the honest answer is a different house. We’ll say so early, before you’ve paid for quotes and an appraisal.
Who this page is for
- You’ve found a house in Calgary or elsewhere in Alberta that needs work, and you don’t have the renovation money on top of the down payment.
- The home has Poly-B, old flooring, a dated kitchen or bathroom, or anything else an inspection says should be fixed soon after you move in.
- You’re buying with less than 20% down and want the work in an insured mortgage.
- You want to know whether the job is one advance or staged, and which lenders will take it, before you write the offer.
Where we work
We’re in Kensington at 223 14 St NW in Calgary and licensed across Alberta: Calgary, Edmonton, Fort McMurray, Airdrie, Cochrane, Okotoks, Chestermere, Red Deer, Lethbridge, Grande Prairie and Medicine Hat. Most of a purchase is handled remotely. For more background, read our guides to using a purchase plus improvement mortgage and fixer-upper vs move-in ready, or about buying your first home in Calgary.
Common questions about purchase plus improvements mortgages in Calgary
Can I add renovation costs to my mortgage when I buy a house in Calgary?
Yes, with a purchase plus improvements mortgage. The lender adds the quoted cost of the work to the price, lends against the value of the home once the work is done, and holds the renovation money back until the work is finished. On a real Calgary purchase we arranged, $28,734 of plumbing, drywall and paint went into the mortgage on an $870,000 house.
How much renovation can I add to a purchase mortgage?
It depends on the insurer and the lender. CMHC insures up to 95% of the as-improved value on a one- or two-unit home you live in, with an as-improved value under $1,500,000. Lenders then set their own caps: some limit the improvements to 10% of the as-improved value, others allow more.
Can I add $60,000 of renovations to my mortgage?
Often, yes, but not with every lender. On a $450,000 house, $60,000 of work is about 11.8% of the $510,000 as-improved value. A lender that caps improvements at 10% of that value tops out at $50,000 on this house, so the file has to go to a lender that allows more. Under CMHC’s rules, work over 10% is paid out in stages as it’s done.
How much down payment do I need for a purchase plus improvements mortgage?
The down payment is based on the as-improved value, not the price alone. With default insurance, the minimum is 5% of the first $500,000 and 10% of the rest. On a $450,000 house with $60,000 of work, that’s $26,000, compared with $22,500 to buy the same house as-is.
When do I get the renovation money?
After the work is done. The lawyer holds the improvement money back on closing, and the lender releases it once the work is finished and checked. On larger jobs, CMHC-insured financing pays it out in stages as the work progresses. Until then, you or your contractor carry the cost.
What happens if the renovation costs more than the quote?
You pay the difference. Only the quoted amount goes into the mortgage. On the Calgary file on this page, the painting came in about $2,780 over its quote, and the buyers paid that themselves.
What renovations can I include in a purchase plus improvements mortgage?
Work that adds value to the home, backed by written quotes: plumbing, flooring, kitchens, bathrooms, paint, windows. Furniture and anything you’d take with you when you move don’t count. Some lenders take cosmetic work only and exclude structural work, so a large or structural job narrows the choice of lender.
Can I add the cost of replacing Poly-B to my mortgage?
Yes. In a Calgary purchase we arranged, $28,734 of quoted work to replace the Poly-B water lines, repair the drywall and paint went into the mortgage. It added about $145 a month to the payment.
Is a purchase plus improvements mortgage better than a HELOC or a refinance later?
If you’re putting less than 20% down, it’s usually the only way to borrow for the work at the start, because a home equity line of credit or a refinance needs equity you don’t have yet. If you have the cash, or the work can wait until you’ve built equity, paying cash or borrowing later can cost less.
Found a house that needs work? Send Josh Tagg the price and the rough cost before you write the offer.
We’ll tell you which lenders’ limits fit the job, what you’ll need down, and how the contractor gets paid before the holdback is released.
Apply online Book a discovery call
Or call (403) 241-3255. Josh Tagg, Mortgages for Less with INDI Mortgage, licensed by the Real Estate Council of Alberta.
Published · Last updated
The file figures on this page come from one Calgary client file arranged by this office, a purchase that closed on September 1, 2023, at the rate in effect then; client details have been changed. The $450,000 example is our own arithmetic on CMHC’s published rules and premium table, not a lender decision, and it assumes the as-improved value equals the price plus the cost of the work. Insurer rules are from CMHC’s published CMHC Improvement product page; Sagen and Canada Guaranty have their own. Improvement limits, advance rules, premiums and eligible work vary by lender, insurer, borrower and property, and all financing is subject to lender and insurer approval. This is commentary, not advice. Rates and figures as of October 2026. This page is general information, not financial, mortgage, tax or legal advice. Please speak with a licensed mortgage professional. Mortgages for Less with INDI Mortgage, licensed by the Real Estate Council of Alberta.