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 CMHCinsured loan through an approved lender.

For more information call CMHC at (416) 221-2642 or www.cmhc.ca.

EXAMPLE:
Purchase Price
$100,000
Renovations/improvements costs
$25,000
Total cost
$125,000

Lending Value
$125,000
Maximum Mortgage (95%)
$118,750
Mimimum 5% down payment
$6,250

 

Article courtesy of TREB www.torontorealestateboard.com