Purchase Plus Improvements Program
Helps qualified home buyers carry home improvement costs into their mortgage with as little as 5% down.
Sagen can help qualified homebuyers make their new home just right for them, with tailored improvements, immediately after taking possession of the purchased property. All this can be done with one manageable mortgage and with only 5% down.
Acceptable Loan Purpose and Applicable Loan-to-Value Limits
Purchase Transactions
- 1 and 2 units: 95% LTV (includes both purchase and improvement amount)
- Property value ≤ $500,000 –5% down payment required.
- Property value > $500,000 and < $1,500,000 –5% down payment required up to $500,000, with an additional 10% down payment on the portion of the home value above $500,000.
- 3 and 4 units: 90% LTV (includes both purchase and improvement amount).
- Single or multiple advance options (excluding initial purchase advance) are permitted and may be managed by Lenders. Improvements must be greater than 10% of the as-improved value to be eligible for draws managed by Sagen.
- Lending value is based on the lesser of the improved property value or the sum of the purchase price plus direct costs of the improvements.
Loan Security
- First and second mortgages
Eligible Properties
- Maximum 4 units where 1 unit must be owner occupied.
- New construction covered by a Lender approved New Home Warranty Program*
- Existing resale properties.
- Readily marketable residential dwellings, located in markets with demonstrated ongoing re-sale demand.
- Estimated remaining economic life of the property should be a minimum of 25 years.
- In addition, for 3 and 4 units, the property must meet the following criteria:
- Municipal zoning
- Fully self -contained units
*For new construction properties in the territories (Yukon, Northwest and Nunavut Territories) where New Home Warranty is not an option, Lenders must obtain either the occupancy permit or a third-party report from a qualified professional such as: an inspector, architect or engineer. The qualified professional must carry the appropriate liability insurance and confirm construction is completed in compliance with applicable bylaws and regulations.
Maximum Property Value
- > 80% LTV: Property value must be less than $1,500,000
- ≤ 80% LTV: Property value must be less than $1,000,000
Qualifying Terms and Interest Rates
- Equity at sale closing includes the equity to close the sale plus additional equity for improvement portion.
- Fixed, standard variable, capped variable and adjustable rate mortgages are permitted.
- Maximum interest rate term of 25 years.
- The qualifying interest rate is the greater of the contract rate plus 2 % or 5.25 %.
Amortization Options
- Up to 30-year amortization
- For greater than 25-year amortization LTV must be >80%, and one of the following applies.
- A minimum of one applicant must meet first-time homebuyer’s criteria; OR
- Purchase of a new constructed home.
Premium Rate
The premium payable will be the lesser of the premium as a % of the total new loan amount or the premium as a % of the top -up portion on the additional loan amount (if existing insured) based on the rates below:
| LTV Ratio | Premium Rate | Top-Up Premium |
|---|---|---|
| Up to 65% | 0.60% | 0.60% |
| 65.01% - 75% | 1.70% | 5.90% |
| 75.01% - 80% | 2.40% | 6.05% |
| 80.01% - 85% | 2.80% | 6.20% |
| 85.01% - 90% | 3.10% | 6.25% |
| 90.01% - 95% | 4.00% | 6.30% |
The above chart is for mortgages with an amortization that is 25 years or less. If a mortgage is eligible for an amortization greater than 25 years (up to 30 years) an additional premium of 0.20% will apply.
The mortgage insurance premium is non-refundable, paid at the time of closing and may be added onto the mortgage.
Borrower Qualification
Income and Employment
- Standard income and employment verification requirements apply.
- Projected rental income from newly built units will be permitted for qualification purposes using fair market rents provided by an appraiser.
Credit
- 80% LTV: At least one applicant is required to have minimum credit bureau score of 600.
- ≤ 80% LTV: At least one applicant should have a minimum recommended credit score of 680.
Down Payment
- Qualified home buyers may use traditional down payment sources including: personal savings, RRSP withdrawal, a non-repayable gift from an individual related to the borrower through a familial or legal relationship, sweat equity, existing home equity, proceeds from sale of property.
- Government grants may be considered if pre-approved by Sagen.
GDS / TDS Guidelines
| GDS | TDS |
|---|---|
| 39% | 44% |
Documentation Requirements
- For a list of eligible improvements please refer to the Sagen Renovation Worksheet found at www.Sagen.ca – Lender – Products – Purchase Plus Improvements Program. Ineligible improvements would include, but are not limited to, any form of personal chattel such as furniture, appliances, electronics or other forms of moveable property.
- For Sagen managed advances, inspections may be ordered using Sagen’s Inspection Request Worksheet located at sagen.ca – Tools & Resources – Lender Forms & Worksheets – Inspection Request Worksheet.
The Lender is responsible for obtaining documentation outlining the proposed improvements supporting the as improved value such as, but not limited to renovation quotes or estimates. - The Lender is responsible for verifying the proposed improvements have been completed via documentation such as, but not limited to: a third-party report from a qualified professional, photos of the indicated improvements that support they have been completed (i.e. before and after photos), or paid invoices. The appropriate documentation should be commensurate with the amount and scope of improvements.
- For 3 and 4 unit properties Sagen requires that the Lender obtains a general assignment of rents and leases or include this requirement in the Standard Charge Terms.
Additional Terms
Sagen will issue a conditional Commitment for Mortgage Insurance based on the LTV of the lending value of the improved property provided:
- Coverage issued at the time of closing is for financing related to sale price only.
- Mortgage insurance coverage will be effective for any Lender-managed advances provided proper confirmation of work completed is documented and on file.
- For Sagen managed advances we will pay for up to 4 progress advance inspections. If more than 4 advances are required, the customer is responsible for the cost of the additional inspections required. Inspections may be ordered using Sagen’s Inspection Request Worksheet located at sagen.ca – Tools & Resources – Lender Forms & Worksheets.
Eligible Products*
- Business for Self (Alt. A) Program
- Borrowed Down Payment Program
- Family Plan Program
- Homebuyer 95 Program
- Investment Property Program
- New to Canada Program
- Second Mortgage Program
- Vacation / Secondary Home Program
*For specific underwriting guidelines related to the above eligible products, please refer to the applicable product overview.
Ineligible Products
- Progress Advance Program
