Renovation Mortgage Options: Turn Your Dream Home into Reality

1. FHA 203k Loan

Ideal for: Homebuyers and homeowners seeking a government-backed loan option with a low down payment, designed for those looking to purchase or refinance a home that needs repairs or renovations.

Features of the FHA 203(k) Loan:

• Two Loan Options:
• Limited 203(k): Ideal for minor repairs and updates.
• Standard 203(k): Designed for more extensive renovations and major improvements.
• All-in-One Financing: Combines the costs of purchasing or refinancing the home with renovation expenses into a single loan.
• Flexible Credit Requirements: Easier approval for borrowers with less-than-perfect credit.
• Simplified Process: One loan closing for both the home purchase/refinance and the renovation.

2. Fannie Mae HomeStyle® Renovation

Ideal for: Homebuyers or homeowners seeking conventional financing with flexibility for renovation projects.

Features

• Finance both your home purchase and renovations in one loan.
• Use the funds for a variety of projects, from small fixes to major upgrades.
• Competitive interest rates and low down payment options.
• Available for primary residences, second homes, and investment properties.
The HomeStyle Renovation loan offers a simple, flexible way to fund your home improvements with just one mortgage.

If you’re a first time buyer (or you haven’t owned a home in the past 3 years), and you’re going to be living in the property then the FHA’s 203k Program might be a great “low down payment” Fixer Financing Option For You.

Here’s how it works

• Down payments are low, usually 3.5%
• You can get your down payment from an external source(like family)
• You can have “less than perfect” credit.
• Great for Properties where major renovations make a property “Livable” again.
• “Streamlined 203k’s” are available for less complicated fixer uppers.
• Property must have 1-4 Units To Qualify.
• Only available to Owner Occupants (no investors)
• Prior to purchase you’ll coordinate with a contractor to come up with an Estimate of Repair costs.
• Repair funds will be placed in Escrow at closing.
• Funds are released according to a draw as phases of the project are completed.

• Finally, if you want to avoid the hassle of dealing with banks, underwriters and complicated repair “draw” protocols, then “Hard Money” might be the right option for you.


• Hard Money is basically a loan from a Private Investor who specializes in funding “Fix & Flip” or “Fix & Rent” Projects.


• Typically a Hard Money transaction is WAY more convenient than the other 2 options on this page, But… a Hard Money Loan can be MUCH more expensive.


• Many Hard Money Lenders will charge anywhere from 2-6 points (% of entire project cost) up front with High Monthly Interest rates for the duration of the loan term.


• And with hard money, you’ll often have to “get the investor out” of the project by selling the property fast or refinancing with a conventional bank or mortgage company in 6-12 months.


• That said, even with the expense Hard Money is a very popular option with many investors because it allows them to do more deals, quicker, and with less stress.