Homes that are financially within reach for first-time buyers are often in need of updates. Fortunately, there are a number of home-loan products that offer an affordable financing solution by allowing rehab costs to be included in mortgage payments.
“Fixer-uppers provide an opportunity for homeowners to get into a home, make it their own and build equity. And there are great vehicles like the renovation loan that give more buyers the ability to take on these projects. These loans really expand the options in terms of the homes you can buy,” says @properties co-founder Mike Golden.
There are several types of renovation loans available for homeowners, including an FHA 203k loan and Fannie Mae’s HomeStyle Renovation loan. Both have low-down-payment options, and both can be used for structural or cosmetic renovations. Buyers can begin work immediately after closing on their home.
Renovation loans give buyers more opportunities to get into the housing market and outfit a home with the finishes they want, according to Golden.
“In the Chicago market, where we aren’t seeing huge price appreciation, taking a fixer-upper that has been overlooked, and transforming it with today’s desirable features, is a great way to add value and build equity,” he says.
If you are thinking about buying and considering a renovation loan, be sure to consult a broker to determine the best course of action for finding a home and loan that fit your wants and needs.