Imagine finding an Ontario house at a surprisingly affordable price. You make an offer, arrange financing, and start planning your move. Then the home inspection reveals a damaged roof, foundation cracks or outdated electrical wiring.
You can afford the mortgage. But will the lender approve the house?
CMHC’s October 22, 2026 release raises an important question about the condition of Canada’s existing housing stock—and what it means for Canadians buying, selling or refinancing homes.
Nearly One Million Homes Needed Major Repairs
CMHC reported that nearly one million Canadian homes, or 6.1% of housing stock, needed major repairs according to the 2021 Census. This is a historical finding about 2021 conditions—not a count of homes requiring repairs in October 2026.
CMHC warned that losing deteriorating, affordable homes could worsen housing shortages even as new homes are built.
How Can Property Damage Affect Mortgage Approval?
Mortgage lenders evaluate both borrower and property securing the loan. Serious foundation movement, roof leaks, unsafe electrical systems and persistent water damage can affect the property’s appraised value, safety, marketability or insurability.
A lender may require further assessment, proof of repairs, contractor estimates or satisfactory property insurance before advancing funds. Some properties may be declined.
Why a Home Inspection Can Complicate a Mortgage
A home inspector assesses visible systems and components. An appraiser assesses value for the lender; an appraisal is not a substitute for a home inspection.
An inspection report does not automatically go to the mortgage lender. Nevertheless, defects can change the purchase agreement, insurance availability or financing conditions. Buyers should avoid waiving important conditions before investigating significant problems.
Even when a borrower qualifies financially, major roof deterioration, faulty wiring or water damage may make the property difficult to insure on acceptable terms. Mortgage lenders normally require property insurance before advancing the mortgage.
Confirm insurability before committing to a property with major defects.
Can You Finance the Purchase and Repairs Together?
A purchase-plus-improvements mortgage may help an eligible buyer include approved renovations in the overall financing plan. For example, a $450,000 purchase plus $35,000 in repairs represents a $485,000 project before other costs.
That does not mean the full project amount is automatically mortgageable. Financing depends on the down payment, appraisal, lender and insurer rules, and eligible improvements. Some programs release renovation funds only after work is completed, creating an upfront cash requirement.
Serious safety or structural problems may still make a property ineligible until repairs are completed. Existing homeowners may instead explore renovation refinancing or other secured borrowing, subject to qualifications and equity. Consider a $450,000 home requiring $60,000 in repairs compared with a $495,000 home requiring $5,000. Their respective purchase-plus-repair costs are $510,000 and $500,000, before closing costs and unexpected work. The cheaper listing is not necessarily the better financial decision.
What Ontario Buyers Should Do Before Making an Offer
Have appropriate inspections performed; arrange specialist assessments for major concerns; obtain written repair estimates; verify insurance eligibility; and review lender financing requirements—including when renovation funds can be released. Consider suitable financing and inspection conditions in an offer. Qualifying as a borrower does not necessarily mean a distressed home qualifies as mortgage security. Understanding repair costs, insurance requirements and lender conditions early can prevent a stressful closing.
Source: CMHC release, October 22, 2026.
