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Ilenna Tai's
Real Estate Knowledge Center: |
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CMHC Purchase
Plus Improvements
Canada Mortgage and Housing Corporation
(CMHC) insured mortgage loans are available to cover the purchase price
of a home as well as an amount to pay for immediate major renovations or
other improvements that the purchaser may wish to make to the property.
This option eliminates the need to obtain secondary financing after the
purchase to pay for improvements. The homebuyer obtains a single first mortgage,
makes a single mortgage payment, and benefits from first mortgage interest
rates.
Details
The insured loan will be based
on the lower of:
- The purchase price plus the
actual cost of improvements, or,
- The "as improved" market value.
Prior to approval, CMHC will determine the market value of the property
after renovations/improvements. The lending value will not exceed the
market value of the property after renovations/improvements.
Applicants must have
the following:
- A minimum of 5% down payment
of total cost (purchase price plus renovations/improvements)
- Cost estimates for renovations/improvements
- Qualifications to obtain a
CMHC-insured loan through an approved lender.
| EXAMPLE: |
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Purchase Price
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$100,000 |
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Renovations/improvements
costs
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$25,000 |
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Total cost
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$125,000 |
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Lending Value
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$125,000 |
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Maximum Mortgage (95%)
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$118,750 |
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Mimimum 5% down payment
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$6,250 |
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* Where the
loan-to-value ratio is greater than 90%, the maximum house price including
the cost of improvements is $250,000 in Toronto.
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