Canada Guaranty Mortgage Insurance Benefits

Mortgage Insurance Insights Newsletter

Products + Solutions


Purchase Advantage Plus - Home Renos

Purchase Advantage Plus™
The Purchase Advantage Plus™ program is designed to assist borrowers who are looking to purchase a home with a desire to implement value-added improvements immediately after taking possession. This program allows homebuyers to include these renovation costs within their first mortgage, and all with as little as 5% down.


PROGRAM GUIDELINES

Overview

  • Purchase transactions.
  • Eligible for portability.
  • Maximum 4 units, with 1 unit owner-occupied.
  • New construction or existing resale properties.
  • Maximum 95% LTV for Purchase of 1-2 units.
  • Maximum 90% LTV for Purchase of 3-4 units.

Lending Value

  • The lending value is based on the lesser of the improved property value or the purchase price, plus all direct costs associated with the improvements.

Borrower Qualifications

  • A full appraisal is required for improvements exceeding 20% of the as-is value of the home or $40,000.
  • The borrower must provide the lender with quotes for the work to be completed.
  • Standard underwriting guidelines apply.

Documentation Requirements

  • Standard documentation.
  • Lender is responsible for managing holdbacks.
  • Lender to confirm improvements are completed.

Non-Conforming Improvements
While chattels and certain upgrades will often add to the marketability of the property, under this program, the following items would not qualify as an improvement:

  • Appliances
  • Decorative Items (light fixtures, etc.)
  • Hot Tubs
  • Pools and Landscaping*
  • Furnace/Air Conditioner

*A percentage of the cost may be considered on an exception basis.


UNDERSTANDING THE PURCHASE ADVANTAGE PLUS™ PROCESS


The below steps highlight the process by which the Purchase Advantage Plus program traditionally follows. From initial quote to finished improvements, understanding and preparing for each phase will help expedite the review process.

  • STEP 1: Borrower makes an offer on a property.
  • STEP 2: Quote is established for the work to be done. This quote should list the following information:

    • Name, address and contact information of the contractor
    • Details of the work to be done and materials being used
    • Total cost and terms of payment
  • STEP 3: Borrower provides his/her lender with the quote(s) at the time of application.
  • STEP 4: Deal is approved, conditions are met and file is funded.
  • STEP 5: Lender holds back the amount of improvements.
  • STEP 6: Lender to confirm that improvements are completed.
  • STEP 7: Holdback is released to the borrower.


Should you have any questions or wish to discuss your client’s unique circumstances, please do not hesitate to contact your dedicated Account Executive or speak directly with a member of our National Underwriting Team at 1.877.244.8422.

NOTE: The Lender’s internal guidelines always take precedence and must be adhered to prior to review by Canada Guaranty.

Copyright © 2010 - 2017 Canada Guaranty Mortgage Insurance Company. All Rights Reserved. All mortgage insurance is underwritten by Canada Guaranty Mortgage Insurance Company.

Terms of Use | Privacy Policy | Portfolio Metrics