2024 Loan Products

Maximize Your Home’s Potential with a Renovation Loan

By Katie Murray on June, 5 2024
Back to main Blog
Katie Murray

Are you eyeing that charming fixer-upper or dreaming of transforming your current space into something spectacular? Renovation loans might just be the magic wand you need to turn those dreams into reality! Whether you're a first-time homebuyer or a seasoned homeowner looking to spruce up your space, renovation loans offer a multitude of opportunities to finance your home improvements while keeping your budget in check.

What are Renovation Loans?

Renovation loans are special financing options designed to help homeowners or buyers purchase a property in need of repairs or to update an existing home. These loans offer the flexibility to combine the purchase price or existing mortgage with the cost of renovations into a single loan, making it easier to manage your finances and streamline the renovation process.

How Do They Work?

Unlike traditional mortgages, renovation loans factor in the estimated cost of repairs or renovations when determining the loan amount. This means you can borrow based on the future value of your home after the improvements are made rather than its current condition.

Here are several types of renovation loans available, each with its own features and eligibility criteria:

  1. FHA 203(k) Loan: Backed by the Federal Housing Administration, this loan is ideal for buyers looking to purchase a home in need of major repairs or renovations. It allows borrowers to finance both the purchase price and renovation costs into a single loan, with flexible eligibility requirements.
  2. Fannie Mae HomeStyle® Renovation Mortgage: This conventional loan option offers financing for a wide range of renovations, including structural repairs, cosmetic updates, and energy-efficient improvements. It provides borrowers the flexibility to work with a variety of contractors and complete renovations at their own pace.
  3. VA Renovation Loan: Exclusive to eligible veterans, active-duty service members, and military spouses, this loan program offers the opportunity to purchase or refinance a home and include renovation costs in the loan amount. It's a great option for those looking to customize their home to meet their specific needs.

With renovation loans, the possibilities are endless when it comes to creating your dream home. Whether you're buying a fixer-upper or transforming your current space, these specialized financing options offer the flexibility and support you need to turn your vision into reality. For more information, contact a Ruoff mortgage loan officer; they will be able to answer questions and walk you through the process.