If you want to transform a fixer-upper into a space you truly love, a renovation loan can help you get the funds to do that. At Primary Residential Mortgage, Inc., we’ve answered some common questions about renovation loans to help you understand your options and reach your financial goals.
What is a renovation loan?
A renovation loan helps you get the funds to buy or refinance a home along with the funds you need to fix it up. It’s a great option for those who want to customize a fixer-upper.
How does a renovation loan work?
A renovation loan wraps the cost of a home purchase or refinance loan and the cost of renovations into a single loan, so there is only one closing and one monthly payment. Depending on which loan you get, you can use the funds to do anything from buying new appliances to demolishing and rebuilding a house.
How much can I borrow?
You have are a few options for renovation loans depending on the extent of the renovations you have planned:
- An FHA 203(k) Limited loan lets you borrow up to $35,000.
- An FHA 203(k) Standard loan lets you borrow over $35,000.
- A HomeStyle Renovation loan lets you borrow up to 75% of the home’s after-improved value for luxury renovations.
What types of projects can I use the money for?
FHA 203(k) Limited
An FHA 203(k) Standard Limited loan lets you make minor changes to a home. This option is ideal for installing new appliances or fixing things like roofs, septic systems, HVAC systems, plumbing, electrical systems and flooring.
FHA 203(k) Standard
An FHA 203(k) Standard loan is more flexible, covering everything from minor rehabilitations to complete tear-downs. As long as the foundation remains in place, a home can be demolished or razed as part of rehabilitation.
HomeStyle Conventional Renovation
A HomeStyle Conventional Renovation loan lets you finance luxury items like swimming pools, detached garages or gazebos on top of basic renovations.