What to Know About Purchase Plus Improvements in Alberta

You’ve found a place you love…but the kitchen is stuck in the 90s, the flooring is tired, or the windows need upgrading. Walking away isn’t your only option.

That’s where Purchase Plus Improvements (PPI) comes in. This program lets you roll certain renovation costs into your mortgage, so you don’t need a separate loan or line of credit to get the work done.

Here’s a clear, step-by-step look at how Purchase Plus Improvements works, what it will and won’t cover, and what to watch out for.

1. What Is Purchase Plus Improvements?

Purchase Plus Improvements is a mortgage option that lets you:

• Buy a home

• Add in the cost of approved renovations or upgrades

• Finance everything together in one mortgage

Instead of paying for renovations out of pocket or putting them on high-interest credit, you use your mortgage to fund them at mortgage rates.

Lenders and insurers treat this as a standard purchase with a renovation component attached. The key is that the work is planned and priced upfront and completed within a set period after you take possession.

2. How Much Can You Add for Renovations?

Each lender and insurer has their own limits, but most fall into a similar range.

Common patterns you’ll see:

• Improvements are usually capped at a percentage of the property value (for example, 10–20% of the home’s value).

• Many conventional (uninsured) programs cap improvements at around $40,000.

• Insured programs (with CMHC, Sagen, or Canada Guaranty) may allow higher improvement amounts as long as the appraised “as-improved” value supports it and the work is reasonable for the area.

• Some specialty lenders allow higher ranges (for example, $5,000 up to $100,000), again subject to value and approval.

One important detail:

 The lender doesn’t just look at how much you want to spend. They look at the “lending value” of the property, which is usually the lower of:

• The appraised “as-improved” value

• The purchase price plus the direct cost of improvements

This is what they base your mortgage amount on.

3. What You Need Upfront: Quotes and Plans

Purchase Plus Improvements isn’t a “figure it out later” product. To get approved, you’ll need to bring some homework with you.

Lenders will require the following at the time the mortgage application is submitted:

• A detailed list of improvements you plan to do

• Written quotes from contractors showing the cost and scope of work

• Cost estimates broken down by item (e.g., flooring, kitchen cabinets, windows)

• Building permits, if any of the work is structural or requires municipal approval

Insurers also expect the lender to have these quotes on file before signing off. The more clear and detailed the quotes, the smoother the approval and the appraisal process will be.

4. How and When the Money Is Released

This is the part that surprises most buyers: you don’t receive renovation money in cash at closing.

Instead, here’s what usually happens:

1. Your mortgage is approved including the renovation amount.

2. On closing day, the full mortgage amount is sent to your lawyer, but the renovation portion is held back.

3. You complete the work using your own savings, credit, or payment arrangements with the contractor.

4. Once the work is finished, the lender or lawyer releases the holdback to reimburse you.

To release funds, lenders may require:

• Paid invoices and receipts

• Before and after photos

• An inspection or appraisal, especially if the improvement amount is above a certain threshold (for example, more than $15,000 or 10% of the property value).

Most programs also have a completion deadline, often somewhere between 120 and 270 days from the funding date. Some allow up to 12 months for all funds to be advanced.

5. What Types of Improvements Are Eligible?

Generally, lenders want improvements that add value to the property and become part of the home.

Common eligible improvements include:

• Interior finishes: new flooring, paint, trim, cabinets, counters, plumbing fixtures, lighting, wiring

• Kitchen and bathroom upgrades

• Exterior updates: roofing, siding, windows, doors

• Mechanical systems: furnace, hot water tank, AC, electrical upgrades

• Services: septic, sewer, and similar essential systems

• Driveways, decks, patios, and some landscaping

• The addition of a legal rental unit or secondary suite, if allowed by the specific program and local bylaws

These upgrades make the property more functional, safe, and marketable, which is why lenders are comfortable rolling them into your mortgage.

6. What’s Not Covered?

Not everything you’d like to do around the house will qualify under Purchase Plus Improvements.

Common ineligible items include:

• Furniture and appliances (fridges, stoves, sofas, TVs, etc.)

• Electronics and décor

• Most personal or movable items (anything that isn’t permanently attached)

• The cost of demolition on its own

• In some cases, lender-specific exclusions, such as using the program just to fix serious structural issues or basic habitability problems

The rule of thumb: if it doesn’t stay with the house when you move, or if it doesn’t clearly improve the property’s market value, it may not qualify.

7. Appraisals and “As-Improved” Value

Most Purchase Plus Improvements files will require an appraisal that shows:

• The property’s current value (“as-is”)

• The expected value after improvements (“as-improved”)

The appraiser will review:

• Your list of planned improvements

• Contractor quotes or cost estimates

• How realistic the numbers are for the area and property type

For insured mortgages, if the insurer (CMHC, Sagen, or Canada Guaranty) requires the appraisal, they typically arrange and pay for it. For conventional or uninsurable files, the buyer is usually responsible for the appraisal cost.

In some programs, the lender may also require a follow-up inspection before releasing the final renovation funds.

8. Special Situations: Sweat Equity and Rental Suites

Some lenders and insurers offer extra flexibility in specific scenarios:

• “Sweat equity” (doing the work yourself): Certain conventional programs may allow you to assign a reasonable labour value to your own work, as long as it’s supported by competitive quotes and your skill level. There is usually a cap on how much of the improvement budget can be counted this way. This typically does not apply to insured deals as a down payment source.

• Adding a legal rental suite: Some lenders will use Purchase Plus Improvements (or Refinance Plus Improvements) specifically to add a legal basement or secondary suite. In those cases, lenders often require:

  • Confirmation that the suite is legal and permitted

  • An inspection once work is complete

  • A declaration or municipal documentation before the final draw is released

On the larger end of the scale, if your renovation budget gets high enough (or the work becomes more like a full construction project), you may need a formal construction or progress draw mortgage instead of a standard PPI program.

Final Thoughts

Purchase Plus Improvements can be a powerful tool if you’ve found “almost the right house” and want to make it your own right away. The key is planning:

• Know your improvement budget

• Get proper quotes before you write the offer, if possible

• Understand how and when renovation funds are released

• Make sure your timeline and cash flow can handle paying contractors before reimbursement

If you’d like help building a realistic renovation budget into your pre-approval or want to know whether your plans would qualify under a Purchase Plus Improvements program, I’m happy to walk through it with you.