Renovation Loans for Colorado Buyers
If you found the perfect fixer-upper, but you need extra cash to cover the renovation expenses, a renovation loan can help make your dream home a reality.
What is a Renovation Loan?
A renovation loan allows you to purchase or refinance a home that needs work and roll the renovation costs into the mortgage. Renovation loans cover the purchase price as well as the cost of the upgrades, allowing you to pay those costs as part of your monthly mortgage payment. Renovation loans are typically cheaper than paying for renovations with a credit card or personal loan.
FHA 203k
FHA 203k loans are renovation loans insured by the Federal Housing Administration (FHA). They can be an affordable way to pay for home improvements, and because they are federally guaranteed, they may offer more lenient qualification requirements than other renovation loans.
There are two types of 203k loans: limited and standard. They each have different guidelines about how much you can borrow for renovations and what kind of improvements are eligible. 203k limited loans provide up to $35,000 for renovations but can’t be used for major structural repairs. For 203k standard loans, the renovations can exceed $35,000 and major structural repairs are eligible, but borrowers must use a HUD consultant to oversee the renovation process.
Fannie Mae HomeStyle
Like FHA 203k loans, Fannie Mae HomeStyle is a renovation loan that allows borrowers to finance the cost of their home and the renovation expenses. This conventional renovation loan allows borrowers to take out a loan amount based on the home’s post-renovation estimated value and make a down payment as low as 3%. HomeStyle loans are very flexible when it comes to the repairs and upgrades you can finance, which can give them an advantage over 203k loans depending on your situation.
Get Started on Your Renovation Loan
Get in touch with a mortgage expert who can help you find the right loan options for your situation.