Aug 11 2023

Take a second look at that fixer-upper

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Struggling to find a home you love? You could use a Renovation Loan to transform a fixer-upper.

What’s one of the biggest hurdles today’s homebuyers are facing? You guessed it—finding an affordable home that fits their criteria. At a time when housing inventory is at a record low, it can help to consider a Renovation Loan.

Can’t find your dream home? Renovate it.

renovation loan

Many homebuyers are sick of browsing limited listings. If you’re having trouble finding the right house, you too might be looking for alternative solutions. The good news is that broadening your search to include homes in need of repair could present you with a wealth of new options.

Why fix up a fixer-upper? There are a few advantages to consider:

  • A house may be listed at a lower price if it isn’t in great shape. Using a Renovation Loan to purchase and renovate a home like this could increase its value, growing your investment.

  • You could use a Reno Loan to finance the repair costs into your mortgage. This can make it easier to afford minor to major renovations; keep it simple by updating appliances, carpeting, or roofing or plan to put in a new kitchen or rehab an entire house.
  • Many times, you can get more home for less if you’re willing to renovate. Buyers often find that they’re able to afford a bigger or better-located home when they take on needed repairs.
  • You can customize your home at a lower price. Instead of spending the time and money to build a new house, you can renovate an existing home and upgrade it with the features/floorplan you’d like. Again, these costs (big or small) could be financed into your mortgage.
  • You’ll probably avoid bidding wars. If homes are selling fast in your local market, bidding on a property needing some TLC could thin the competition and help you gain traction.

If you’re a homebuyer: Going this route and renovating a fixer-upper, which may include a short sale, foreclosure, or distressed property, could make it possible to achieve your dream of homeownership. This is especially true if you have your heart set on an area with limited listings.

If you’re a seller: The benefits are two-fold. Right now, nearly 60 percent of homebuyers are willing to buy a fixer-upper. As a seller, you may not need to complete every repair before listing. You could also move up to a larger home using an all-in-one Renovation Loan if you’re having a hard time finding suitable listings.

Take back control in today’s market.

Contact your local Academy Loan Officer to learn about rolling the cost of renovation into your mortgage.

Here are some all-in-one Reno Loans that can make this possible:

FHA 203(k) Standard and Limited.

  • The FHA 203(k)—also called an FHA Construction Loan—is an all-in-one Reno Loan that can be used to buy and fix up a house: all with one application, one closing, and one monthly payment.
  • The FHA 203(k) Standard has no maximum repair limit, while the FHA 203(k) Limited has a $35,000 renovation maximum.
  • Like an FHA Loan, the FHA 203(k) also has a 3.5 percent minimum down payment requirement.
  • An approved 203(k) consultant may be required to plan renovations on the Standard Loan, typically exceeding $35,000.

FNMA HomeStyle® Renovation Loan.

  • The FNMA HomeStyle® is also an all-in-one Renovation Loan with one application, closing, and monthly payment.
  • It can be used to purchase a fixer-upper and receive the funds needed to remodel the home.
  • It provides a convenient way for buyers to make repairs totaling up to 50 percent of the future as-completed value of the property, rather than taking out a HELOC or second mortgage.
  • This loan has a 3 percent down payment minimum and may be more cost-effective than using an FHA 203(k).

Eligible improvements range from small to large and might include kitchen/bathroom remodels, replacing flooring, adding a room, upgrading appliances, repairing roofing, and landscaping, among others. All-in-one Renovation Loans are available to homebuyers of all income levels on almost any type of property.

While it’s imperative to know what you’re getting into and plan your project in advance, purchasing a fixer-upper can give you the chance to customize and improve the value of an outdated house. You’ll have full control over what improvements are made, essentially creating your dream home.

Talking with a mortgage professional can help you better understand what goes into rolling renovation costs into your mortgage.

Academy Mortgage also has Green Energy finance options

In addition to offering all-in-one Renovation Loans, Academy offers the only loan program that allows you to roll Green Energy improvements into your mortgage. This process is simpler than using a Reno Loan and gives you the freedom to start upgrading right away. If you’re interested in energy improvements like solar, air sealing, weather-stripping, window replacements, and more, ask us about our Green Energy Mortgage.

All mortgage products are subject to credit and property approval. Rates, program terms, and conditions are subject to change without notice. Not all products are available in all states or for all amounts. Additional conditions, qualifications, and restrictions may apply. Please contact Academy Mortgage for more information. MAC624-1487107.