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Fixer-Upper / Renovation Mortgage Program Summary

Fixer-Upper / Renovation Mortgage Program Summary

    In addition to obtaining a construction loan, there are multiple mortgage programs designed to help home buyers purchase and renovate fixer-upper properties.  The construction to permanent (C2P), FHA 203 (k) home loan and Fannie Mae HomeStyle Renovation mortgage programs outlined below allow a fixer-upper buyer to finance renovation and remodeling costs without taking out a separate construction loan, which can be expensive and time consuming.  Each program has its pros and cons but can be very useful to someone who needs to finance significant repairs, remodeling or renovations.  Because these programs apply to home purchases and refinancings they are beneficial to both prospective home buyers and existing homeowners who would like to finance a major home renovation project.

    The table below provides a summary of fixer-upper mortgage programs. Click on the program title to learn more about each program.

Fixer-Upper / Renovation Mortgage Program Summary
Construction Loan
  • A construction loan is a short-term mortgage that enables a borrower to finance the cost of building a new home or significant renovations including for a tear-down or fixer upper
  • Construction loans are typically six months to a year in length depending on the timeframe to build or remodel the property
Construction to Permanent (C2P) Loan
  • A construction to permanent loan, or C2P loan, enables a borrower to finance the cost of building a new home or significant renovations, including for a tear-down or fixer upper, with a single mortgage
  • A construction to permanent loan is an attractive alternative to a borrower arranging two separate loans to build or renovate a home
FHA 203(k) Home Loan Program
  • The FHA 203(k) Loan Program enables home owners to finance both the purchase of a home as well as the cost of significant rehabilitation, remodeling and repairs to the home with one FHA mortgage
  • The FHA 203(k) Loan Program allows borrowers buying a home to finance the cost of significant home remodeling or rehabilitation without having to obtain a separate construction loan which can be costly, complicated and time-consuming to arrange
  • Instead, the FHA 203(k) Loan Program enables borrowers to finance the purchase of a home and pay for a significant (greater than $5,000) home improvement project with a single FHA mortgage
  • Although you do not have to be a first-time home buyer to qualify for the FHA 203(k) Program, the program works well for first-time home buyers looking to buy a "fixer-upper"
Fannie Mae HomeStyle Renovation Program
  • The Fannie Mae HomeStyle Renovation Mortgage program is similar to the FHA 203(k) program and enables borrowers to purchase a home that needs renovations or refinance the mortgage on their existing home and include funds for renovating the property in the loan amount
  • Unlike the FHA 203(k) program, the Fannie Mae HomeStyle Renovation Mortgage program does not charge a one-time and ongoing FHA mortgage insurance premium, which are extra costs for the borrower
  • Additionally, the Fannie Mae HomeStyle Renovation Mortgage program applies to both owner-occupied and investment properties as compared to the FHA 203(k) program that only applies to owner-occupied properties
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