Can I get a mortgage for homes that need
renovations?
Want to buy a fixer-upper in Milton but worried banks will say no? Here’s how to get a mortgage for homes that need renovations — fast, practical, no fluff.
Why renovating homes in Milton is a smart move
Milton is growing. New families, commuter demand to Toronto, and rising resale values make renovated homes worth the effort. You can buy lower, renovate, and capture equity — if you get the mortgage right.
This guide tells you exactly how lenders in Canada and Milton look at renovation properties, which mortgage products work, what documentation you need, and the local steps that separate winning offers from wasted time.
The clear options to fund a renovation property in Milton
- Purchase Plus Improvements (aka Purchase + Rehab)
- What it is: Lender includes the estimated renovation cost in your mortgage at closing. You borrow on the after-renovation value.
- When it works: Cosmetic and moderate structural work where a professional quote shows the expected post-renovation value.
- How lenders handle funds: Holdback schedule and inspections before full release.
- Construction Mortgage (Progress Draw)
- What it is: Lender releases funds in stages based on completed work and inspections.
- When it works: Major renovations or full gut/rebuilds.
- Pros: Lower interest on draws; lender oversight keeps project on track.
- Home Equity Line of Credit (HELOC)
- What it is: Access to equity once you have enough down payment or existing property.
- When it works: Smaller upgrades or when you already own property.
- Pros: Flexible draws, interest only on what you use.
- Personal Renovation Loan or Unsecured Loan
- What it is: Higher-rate loans with no mortgage collateral.
- When it works: Small projects or last-minute top-ups.
- Cons: Higher cost; avoid for big structural work.
- High-Ratio Mortgage with CMHC and Contractor Quotes
- What it is: If your down payment is less than 20%, you can still buy and renovate — but you’ll have default insurance. Lenders may accept a renovation plan with contractor quotes to justify the after-repair value.
- Note: Insurance rules are stricter; expect more documentation.
What lenders want to see — and how to give it to them
Lenders focus on risk. Reduce perceived risk and you get funds faster.
- Professional quotes: Two or three contractor estimates. Itemized. Signed.
- Scope of work: Clear list of what will be done, timeline, and permits required.
- After-repair value (ARV): Appraiser or comparative market analysis showing realistic value when work is done.
- Experienced contractor: Lenders prefer licensed trades, clear contracts, and proof of insurance.
- Contingency buffer: Lenders want a contingency (usually 10-20%) in the project budget.
- Down payment and income documentation: Standard mortgage underwriting applies.
- Inspections and holdbacks: Understand staged releases and inspections tied to work milestones.
Local tips for Milton buyers — what Toronto-area lenders and appraisers expect
- Use local comparables: Milton neighbourhood values can swing quickly. Use recent sales in the same subdivision, not city-wide averages.
- Town of Milton permits: Permitting delays kill timelines. Budget time and costs for permits. Ask the contractor to handle permits or get permit costs included in quotes.
- Utility and zoning checks: Older Milton homes may need wiring, HVAC, or plumbing upgrades to meet code. Lenders will flag large systems issues.
- Engage a local appraiser: Appraisers who know Milton can value the renovated look accurately. Your broker or realtor can recommend one.
- Pick lenders active in Halton Region: Big banks and local credit unions that frequently underwrite Milton properties have smoother processes.
Step-by-step plan to win a renovation mortgage in Milton
- Get pre-approved, not just pre-qualified. Know your max and product options.
- Find a property with upside. Look for layout and systems that are fixable — not a structural disaster.
- Hire a contractor for quotes and a realistic timeline. Include contingency.
- Present a clear package to your mortgage broker: purchase price, scope, quotes, ARV justification, contractor credentials, permits plan.
- Choose the right product: Purchase Plus Improvements for small-to-medium rehab; Construction Mortgage for major work.
- Budget for holdbacks and inspections. Line up the appraiser and municipal permit process.
- Execute and track draws carefully. Keep records and photos for the lender.
How much extra can lenders add? Realistic numbers
- Lenders typically lend to the lower of purchase price + reno costs or the after-renovation value.
- Common practice: Lend up to 80% of ARV for conventional mortgages. High-ratio insured mortgages have stricter limits.
- Construction mortgages provide draws to complete work but may require more down payment.
Example: Buy at $700,000, planned reno $100,000, ARV $850,000. A lender may consider $800,000 ARV (if conservative) and lend 80% = $640,000 mortgage against ARV. You cover the difference through down payment or second financing. Work through a mortgage broker to model outcomes.
Common lender red flags and how to avoid them
- Missing permits: Include a permits plan from the start.
- Unlicensed contractor: Use licensed trades and include licensing proof.
- Underpriced quotes: Lenders want realistic costs. Avoid lowball estimates.
- Property in poor condition beyond described scope: Walk the property with the contractor and appraiser before final approval.
Who to talk to in Milton: local pros who speed approvals
- Mortgage brokers who know Halton Region lending rules.
- Local appraisers with Milton experience.
- Contractors who pull permits in Milton and provide staged invoices.
- Realtors who negotiate purchase terms tied to renovation financing.
Need help? Contact Tony Sousa — local Milton realtor who guides buyers through renovation mortgages. Email: tony@sousasells.ca | Phone: 416-477-2620 | https://www.sousasells.ca
Tony connects buyers with trusted mortgage brokers, appraisers, and contractors in Milton.
Cost control and profit math — simple model
- Purchase price + reno cost + closing = total cost.
- ARV – total cost = potential profit (before realtor fees and taxes).
- Always include 10–20% contingency.
Quick example:
- Purchase $650,000
- Reno $80,000
- Closing + holding = $20,000
- Total = $750,000
- ARV = $880,000
- Gross profit = $130,000 minus selling costs — profitable if quotes and timeline hold.
Permits, timelines, and inspections — a Milton checklist
- Confirm required permits with the Town of Milton building department.
- Include permit timelines in your schedule.
- Book appraisals for post-reno release of holdbacks.
- Keep a digital folder with contracts, invoices, photos.
Why work with a realtor who understands renovation mortgages
A realtor who knows local lenders, appraisers, and contractors saves weeks and money. They package the mortgage application so underwriters see a lower risk. That’s the difference between a conditional approval and a fast closing.
Tony Sousa is a Milton-based realtor who positions renovation deals for lenders. He helps assemble contractor quotes, find appraisers, and recommends mortgage brokers who close renovation mortgages regularly.
Contact: tony@sousasells.ca | 416-477-2620 | https://www.sousasells.ca
FAQ — Renovation Mortgages in Milton, Ontario
Q: Can I get a mortgage for a fixer-upper in Milton?
A: Yes. Use Purchase Plus Improvements, a construction mortgage, or combine a mortgage with a HELOC. You need realistic quotes, an ARV, and a lender willing to accept staged releases.
Q: Do lenders in Milton require permits before lending?
A: Not always before loan approval, but permits are usually required to release full holdbacks and for code-related work. Plan and budget for permits.
Q: How much down payment do I need for a renovation mortgage?
A: It depends. Conventional loans typically need 20% down. High-ratio insured mortgages can work with less but have stricter rules. Construction mortgages often require higher down payments.
Q: Which lenders offer renovation mortgages in Canada?
A: Major banks and credit unions offer purchase-plus-improvements and construction loans. Local Milton-friendly lenders and mortgage brokers can point to the best options for your profile.
Q: How long does approval take?
A: Get pre-approved fast (2–7 days). Full approval with renovation packaging may take 2–4 weeks depending on appraisals, contractor quotes, and permits.
Q: What if the contractor runs over budget?
A: Contingency protects you. If you need more funds, consider a HELOC or negotiate a change order with the lender’s approval.
Q: Should I buy a property that needs major structural work?
A: Only with the right professionals and a construction mortgage. Major structural issues increase risk and lender scrutiny.
Q: Who can I call in Milton for help?
A: Contact Tony Sousa for local referrals to mortgage brokers, trusted contractors, and appraisers: tony@sousasells.ca | 416-477-2620.
If you want a personalized plan for a Milton property, send the listing or address to Tony. He’ll review the numbers, recommend the best mortgage path, and connect you with local lenders who underwrite renovation projects reliably.
Act now — Milton moves fast. Get your financing plan and win the right fixer-upper.
