Buying a home that needs a little work? The Purchase Plus Improvements (PPI) program might be exactly what you need. Whether it’s a kitchen upgrade, new flooring, or a basement suite, PPI allows you to finance renovations directly into your mortgage, saving you the stress of high-interest credit or draining your savings.
What Is Purchase Plus Improvements?
PPI is a mortgage program that lets buyers borrow additional funds (up to 20% of the “as if complete” value) to renovate the property they’re purchasing. Instead of taking out a separate loan or line of credit, the renovation cost is simply added to your mortgage.
Example:
- Purchase Price: $600,000
- Renovation Cost: $30,000
- New Mortgage Base: $630,000 (Purchase Price + Quote)
What Kind of Renovations Qualify?
Only non-structural, cosmetic upgrades are allowed under the PPI program, including:
- Kitchen and bathroom remodels
- Flooring replacement
- New roof
- Basement suite (family or rental)
- Windows/doors and energy efficiency upgrades
Side-by-Side Cost Comparison
Here’s what it looks like when you compare a standard purchase with a PPI-enhanced mortgage:
| Details | Standard Purchase | Purchase + Improvements |
|---|---|---|
| Purchase Price | $600,000 | $630,000 |
| Down Payment | $50,000 | $50,000 |
| Mortgage Insurance | $23,100 | $25,200 |
| Mortgage Required | $573,100 | $625,200 |
| Rate / Amortization | 4.29% / 30 years | 4.29% / 30 years |
| Monthly Payment | $2,820.03 | $3,076.40 |
| Difference | – | +$256.37/mo |
🔹 Insurance Premium Increase: $2,100
🔹 No need for extra loan or credit card debt
Who Is Eligible?
This program works with:
- Detached homes, condos, and new builds under $1.5M (or $1M for insured deals)
- Legal duplexes, triplexes, and fourplexes (up to 90% LTV if owner-occupied)
- Uninsurable single-family rentals, capped at $40,000 in improvements
The home must be move-in ready, and all work must be completed within 180 days of closing.
How Does the Money Get Released?
Funds for the renovations are held in a lawyer’s trust account. Once the work is 100% complete and verified with receipts, photos, and inspections (if required), the funds are released to the contractor or buyer.
Renovation Cost Conditions:
- Less than $15,000: Requires paid invoices, contractor confirmation, and before/after photos
- Over $15,000: Appraisal is required showing both current and completed value; contractor quote must be included
Why Use PPI?
- ✅ Increase your home’s value from Day 1
- ✅ Avoid extra loans or credit lines
- ✅ One mortgage, one payment, one interest rate
- ✅ Avoid refinancing and penalty fees down the line
- ✅ Add potential income through a legal basement unit
- ✅ Improve energy efficiency and comfort immediately
Final Thoughts
PPI is one of the most underutilized tools in home buying, especially for clients who are open to buying a property that needs a little work. With proper planning, it’s a simple way to turn a good house into your dream home—all without stretching your finances.
If you’d like to see if this program fits your situation, or you’re a realtor looking to educate your buyers, reach out today. I’d be happy to walk you through the numbers.