About a third of all U.S. housing stock and nearly half the nation’s real estate wealth is held by baby boomers, a generation that is now approaching its sunset years and could spark a &ldquo
Financing a Renovation When You Buy
Dated: August 4 2026
Views: 44
The house has great bones, but needs work, and renovation costs seem prohibitive. There are solutions!
Some mortgage loan programs let you include the cost of renovations or repairs in the purchase financing, allowing you to customize a home to your needs and build equity faster.
These government-backed mortgage programs allow renovation costs to be rolled into a purchase mortgage.
Federal Housing Administration (FHA) 203(k) loan
This loan allows buyers to make major renovations and structural additions provided that the total value of the property falls within the FHA mortgage limit for the area.
Criteria:
• Minimum repair cost must be $5,000
• Borrower must use an FHA approved 203(k) mortgage consultant
• Projects must be completed within 12
months
A limited 203(k) version allows buyers to finance up to $75,000 in their purchase mortgage to cover minor/ nonstructural repairs and improvements with a maximum completion date of nine
months.
Eligible renovations for the FHA Limited 203(k) mortgage loan include:
• Repair or replace plumbing, HVAC, electrical systems, wells and/or septic systems
• Finish attics and basements
• Remodel kitchens and bathrooms• Renovate or construct a garage
• Repair or install new roofing, siding, gutters or downspouts
• Create accessibility for persons with disabilities
Fannie Mae HomeStyle Renovation or Freddie Mac CHOICE Renovation
These conventional loan products allow buyers to borrow up to 75% of either the purchase price plus renovation costs, or the “as-completed” appraised value, whichever is lower.
VA Renovation Loan
• Available to veterans, active-duty military or surviving spouse
• Financing for only primary residences to make renovations that improve accessibility or safety, and not for cosmetic upgrades
USDA Renovation Loan
• Available to eligible buyers in qualifying rural areas
• The purchase price and renovation costs are combined into a single mortgage with no down payment
• Finance up to 100% of the “as-improved” appraised value
Buyers can choose a limited version for non-structural repairs up to $35,000, or a standard
version for structural changes and larger-scale improvements.
What types of properties qualify for these loans?
These programs can be used to purchase:
• Single-family homes
• Two- to four-family units
• Townhomes
• Eligible condominium units (improvements are limited to the unit’s interior for the 203k)
• Manufactured homes titled as real estate
• Hud homes (real-estate-owned properties)
• Mixed-use properties that are at least 51% residential.
Renovation loan vs homeimprovement loan
Home-improvement loans obtained after closing, and home equity lines of credit, often carry
higher interest rates and shorter repayment timeframes. The government-backed financing
options allow you to secure a single loan that is long-term, with a fixed or adjustable rate, to cover both the purchase and renovation of the home.
Contact me to help you connect you with experienced lenders offering these programs!
Source: www.nar.realtor
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