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How to Finance Your Fixer-Upper: 7 Options for Home Repairs

With the high price of home repairs, many people turn to loans for their fixer-upper homes. This article discusses the various financing options for repairs, remodeling, and updates.

Home repairs are expensive!

Even relatively small projects, such as replacing a garage door, can cost over $3,600 according to Remodeling Magazine. Want to do a midrange bathroom remodel? The magazine says it costs an average of $21,377. Roofing replacement with asphalt shingles? Get ready to write a check for $24,700; if you want metal the cost goes over $40,000!

Because of the high costs, many people use loans to finance a fixer-upper. This can include loans for the original purchase and home repairs, or loans that can be used to improve a property you already own.

There are various options, but here are the seven most popular ways to finance your fixer upper.

Loans for a Fixer-Upper: 7 Options for Your Next Home or Current Property

1. Standard 203(k) Renovation Loans (FHA)

A 203(k) loan, which is supported by the FHA, can be used by homeowners to purchase and renovate a home, including single-family homes and properties with up to four units. These are useful loans that have been created by the federal government to support the purchase and enhancement of fixer-upper homes.

These loans are divided into two broad types: standard and Limited. The main difference is cost. If your renovations costs more than $35,000, you will need to use a standard FHA 203(k) loan.

With the standard option, you can get more cash, but the overall process is also more detailed. Qualification can be more stringent, and you may have to work with a consultant, who monitors the project and payments.

2. Limited 203(k) Renovation Loans (FHA)

If your project is less than $35,000, you can use the Limited 203(k) program. This is an effective financing option for small to medium-sized jobs, including the replacement of roofs and gutters, the repair of plumbing features, or minor remodeling that does not involve significant structural components.

The limited 203(k) options allows homeowners and buyers to quickly tap into financing, but the main downside is available cash. While fast and simplified, Limited 203(k) is only available for up to $35,000. This can cover a lot of repair work, but as we have seen there are still many projects above this amount. According to Remodeling Magazine’s 2020 averages, projects that average more than $35,000 include a midrange bathroom addition, major kitchen remodel, and roofing replacement with metal panels. Of course, if you start combining projects, the total can rise quickly. Many owners and buyers will simply find that the Limited 203(k) is out of their range.

3. HomeStyle Renovation Loans (Fannie Mae)

Allowing for both the purchase and renovation of a property, the HomeStyle Renovation loan is an excellent options for homebuyers all across the country.

Construction worker putting the asphalt roofing (shingles) with nail gun on a large commercial apartment building development
Renovation loans can be used by buyers and current homeowners.

There are a few advantages of the HomeStyle Renovation, which is supported by Fannie Mae, over other fixer-upper loans. One of the main advantages is available projects. While some programs place restrictions on what can be completed, the HomeStyle Renovation program has virtually no restriction on the types of improvements. There are no restrictions for occupancy status, which makes this a possible investment loan as well.

The only downside to these loans is qualification, which can be tougher than other government-supported options. For example, you’ll need a 620 credit score to qualify, while the 203(k) program can be used with scores as low as 580; downpayment requirements can be higher as well.

4. CHOICERenovation Loan (Freddie Mac)

This loan program is supported by Freddie Mac, which, alongside Fannie Mae, is one of the leading government-backed mortgage institutions in the country. This program is popular because it offers low downpayment requirements and other features that make it accessible to millions of buyers.

This program is helpful for first-time homebuyers looking for an affordable loan program, as well as rural buyers, who often have fewer buying options available, forcing them to look at fixer-uppers.

For CHOICERenovation, borrowers can finance repairs and updates that cost up to 75% of the home’s value after the updates. For example, if the home will be valued at $200,000 after the renovations, you would have access to $150,000 in renovation costs. However, you would need to qualify for a loan totaling $350,000.

5. Portfolio Loans

The loans we discussed above are all supported by government offices or companies that are backed by the federal government. Portfolio loans, on the other hand, are kept by the lender, which means they have widely-varying requirements and conditions. Instead of being sold to groups like Fannie Mae, portfolio loans are kept by the lender, remaining in their “portfolio” throughout the life of the loan.

While generally used solely for a purchase, some offices do offer portfolio loans for both the purchase and renovation of a property.

The specifics of a portfolio loan can depend on the lender, but you will generally find tougher qualification standards. Because lenders keep the risk, they often make qualification more detailed.

6. Investment Loans

Another way to support the purchase and renovation of a property is an investment loan. Although not offered by all lenders, this option could allow you to purchase a residential or commercial fixer-upper and turn it into an income-generating property.

Investment loans are inherently more risky, so lenders often require larger downpayments and higher credit scores, which can make these loans unattainable for some buyers.


If you currently own your home and need cash for repairs, you can use a Home Equity Line of Credit to finance the updates. This is not a set loan for a specific amount, but rather a line of credit from which you can withdraw. Need $4,000 for new siding? $10,000 for new countertops? $20,000 for a new roof? You can withdraw from the HELOC.

This form of financing tends to offer low interest rates, as the money is secured by your home. But it can be easy to go overboard, so caution is needed when using a HELOC on your fixer-upper.

Providing the Support You Need for Fixer-Upper Loans

If you are looking for a fixer-upper loan, either for the purchase of a property or the improvement of your current home, contact our staff today!