If you have little down payment but know you want to renovate right away, a Purchase Plus Improvements Mortgage may be a great option for you. This new kind of mortgage permits homebuyers to get a mortgage that includes both the purchase price of the existing home PLUS any renovations/improvements the buyer would like to do. Buyers can borrow up to 95% of the purchase price as well as 95% of the improvements made OR 95% of the future expected value after renovations. Renovations like new kitchens, bathrooms, finishing a basement, and adding a nanny suite can add significant value to the home.
The qualifying process includes getting written quotes from licensed contractors or suppliers for products/services to be included in the mortgage application. The funds for the “improvements” portion of the mortgage is released to the buyer once the renovations are complete and inspected by local building inspectors.