Renovation Loans
Renovation loans are specialized financing options that provide homeowners or buyers with funds specifically for home improvements, repairs, or upgrades. These loans are designed to help you enhance your property’s value, whether you’re purchasing a fixer-upper or updating your current home.
Key Types of Renovation Loans:
FHA 203(k) Loans: These government-backed loans allow you to finance both the purchase (or refinance) of a home and the cost of renovations in a single mortgage. There are two main types: the Limited 203(k), which covers repairs up to $35,000, and the Standard 203(k), which is for larger projects. FHA 203(k) loans are especially helpful for buyers with lower credit scores or limited down payment funds, but they do require specific project guidelines and can take longer to close.
Fannie Mae HomeStyle® Renovation Loans: This conventional loan option lets you borrow based on the home’s value after renovations are complete, making it easier to finance major upgrades. HomeStyle loans can be used for a wide range of improvements, including adding accessory dwelling units or landscaping, and often offer lower rates than unsecured loans or credit cards.
Benefits of Renovation Loans:
- Finance both purchase and repairs with one loan (FHA 203(k), HomeStyle)
- Borrow based on the home’s improved value, increasing your budget for renovations
- Simplifies the renovation process by combining purchase and repair into one loan