Yes. You can add renovation costs to your mortgage in Canada using what lenders call a purchase plus improvements mortgage. It rolls the price of planned upgrades into the loan on the home you are buying, so the renovation is financed at your mortgage rate over your amortization rather than on a credit line or a card.
The part that surprises most buyers is the timing of the money. Your lender advances the purchase portion on closing day and holds the improvement portion back. In Ontario that holdback usually sits with your real estate lawyer or with the lender until the work is finished and proven. You pay the contractor first, submit invoices or before and after photos, and get reimbursed after. Anyone planning a kitchen on borrowed funds they expect to receive at closing has the sequence backwards.
How much you can add
The ceiling comes from the mortgage insurer rather than the branch. CMHC Improvement insures up to 95 percent of the as-improved value on an owner-occupied home of one or two units, and 90 percent on three or four. Renovations costing 10 percent or less of that as-improved value are released in a single advance. Larger projects switch to progress advances paid out in stages with inspections between them. Sagen runs a comparable program with as little as 5 percent down. Both require the property value to sit under $1.5 million, a threshold that rules out a good share of freehold Toronto houses but leaves most condos and semis eligible.
Value is the pivot. The lender orders an appraisal that estimates both the as-is value and the as-improved value, and lends against the lesser of the as-improved figure or the as-is value plus the documented cost of the work. Quotes, plans, or a building permit have to back that number up. Because these are high-ratio loans, mortgage default insurance applies, and the premium is calculated on the larger total.
What qualifies
Permanent improvements count. Kitchens, bathrooms, flooring, roofing, windows, wiring, a furnace. Movable property does not, so furniture, electronics and in most cases appliances fall outside the program. Qualifying also happens on the full borrowed amount, at the greater of your contract rate plus two percent or 5.25 percent, inside CMHC debt service limits of 39 percent gross and 44 percent total.
Buyers who want flexibility instead of structure sometimes wait and use a home equity line of credit later, which costs more in interest but comes with no inspections and no invoice trail.
Related reading: What Is a Home Appraisal and Why Lenders Require One, What Is Mortgage Default Insurance in Ontario?, and What Are GDS and TDS Ratios in a Canadian Mortgage?
