Renovate a Fixer-Upper With No Cash

Want to Renovate a Fixer-Upper, But Have No Cash? No Problem!

If you’re buying a home that needs a little extra attention, a typical fixed-rate mortgage isn’t going to help you pay for repairs. Instead of giving up on your dream home entirely, consider an FHA 203k mortgage. This type of financing is ideal for borrowers who either have little money for a down payment or who have an average or slightly below average credit score. Just because your future home may require renovations or other work before you can move in, doesn’t mean you shouldn’t move in at all.

Fortunately, the 203k loans can be used for almost any kind of repair or improvement – even the reconstruction of a demolished home, as long as the original foundation remains. Eligible improvements range from improvement to the home’s function to major landscape work and site improvements. So, if you want to renovate a fixer-upper but don’t have the cash on hand, read on for more information about the real estate market and home renovation loans.

Changes in the Real Estate Market

Although the real estate market has experienced some turmoil the past decade, it’s slowly been making a comeback. As the real estate market rebounds in many areas of the country, there are homes in need of repairs, remodeling and renovations. There are still plenty of foreclosures available that are fixer-uppers. At the same time, as the real estate market improves, financing home renovations has gotten easier. The right renovation loan may be able to help you take advantage of these market forces as they converge.

What is a Renovation Loan?

A loan for a home renovation or a home renovation mortgage is a loan that not only is based on the property’s current value, but takes into account the value of the property after the renovations have been made. In other words, if a property is estimated to currently be worth $200,000, but after proposed renovations it will be worth $250,000, it is the higher amount that will be considered when acquiring the loan. This is significant, especially if you can put some “sweat equity” into the property by doing some of the work yourself or with the help of friends and family.

You can even get government-backed financing with a FHA 203K renovation loan. A 203K renovation loan is government insured and is designed to help purchasers buy properties that are in need of either cosmetic, or even structural repairs. This program allows a single mortgage to cover both the purchase and the upgrade costs in one mortgage. The 203K renovation loan requires the borrower to use the fixed-up property as their primary residence, so it is not an option for “flipping” a home. There is another type of 203K loan referred to as an FHA 203K streamline loan. With this 203K streamlined version, the home renovation loan process is simpler as the borrower is limited to $35,000 in renovations and the improvements can only be cosmetic, not structural.

There are also other programs available to help you buy that fixer-upper with little or no cash. Getting the right financing help is critical.

Getting the Help You Need

Some people have been discouraged by what they’ve heard about the high restrictions and credit scores needed to get a traditional mortgage. The good news is that, like the old expression, “Necessity is the mother of invention.” New financing products have been created to help those who may otherwise be shut out. These renovations loans are helping many get their first home, and even back into a home. Today, financial organizations like are available to help you take advantage of the myriad of programs available. They have the knowledge and resources to assist people in getting the renovation loan best suited for their needs.