Is It Possible to Include the Cost of Repairs and Improvements in Your Mortgage?



The cost of renovating a fixer-upper may rapidly mount. Things might get tight if you’ve already put down a considerable amount of money for the down payment and closing charges. Even if you’re a cash-rich investor, leverage is crucial. Less out-of-pocket spending is typically preferable, especially in a low-interest-rate environment.

There are home renovation loans that you may use to incorporate the expenses of house renovations in your mortgage, depending on your requirements, what the property will be used for, the scale of the project, and your credentials.

Continue reading to determine which financing option is ideal for including remodeling expenditures in your mortgage.

Mortgage Alternatives for Renovations

Home renovation loans are not as popular as other types of mortgages. There are just two basic types of home repair loans available.


Fannie Mae has sought to increase eligibility for the Homestyle Renovation Mortgage in recent years.

  • Applicants must fulfill Fannie Mae’s qualifying requirements.
  • Renovations are limited to 75% of the After Repair Value (ARV), defined as the Purchase Price + Project Cost (whichever is lower).
  • With this financing, contractors can pay for up to 50% of material expenses in advance.
  • The initial post-value appraisal, completed before the loan closure, is the sole valuation necessary.

Fannie Mae is giving bonuses if consumers combine a renovation mortgage with their new HomeStyle loan product for energy upgrades.


The Federal Housing Administration (FHA) insures and secures 203(k) home renovation loans for borrowers who are buying a fixer-upper that requires repairs, improvements, and renovations.

This makes it simpler to finance the property purchase and any necessary modifications, whether the work is done by qualified professionals or done on your own.

Take note of the two sorts and variants of this loan:

203 (K) Standard 

This is intended for large-scale repairs to a principal dwelling. A normal 203(k) loan would most likely cover damage from a fire or flood.

This category might include foundation concerns for essential structural changes to alleviate security hazards. Also eligible are room expansions and floor repairs.

This financing covers up to $625,000 in combined startup and renovation expenditures, with minimal remodeling requirements starting at $5,000.

203 (k) Limited

This loan, also known as a Streamline, is for less substantial repairs involving less than $35,000 in alterations. Upgrades and other visual improvements, such as B. Kitchen and bathroom changes and the replacement of old appliances, are examples.

If you don’t have the funds to undertake repairs, there are other options:


A loan guaranteed or given by the United States Department of Agriculture (USDA) can assist you in traveling out of town. USDA loans assist low- and middle-income persons in purchasing a house with little or no money down. You can include the cost of required repairs done by qualified contractors in your 30-year fixed-rate mortgage if your small house on the prairie requires some maintenance.


If either of you has served in the military, you may be eligible for a Veterans Affairs (VA) mortgage. You can use your VA loan to buy, construct, or repair a house. The VA may also be able to provide you with additional funds to help you enhance the energy efficiency of your house.


Borrowers can utilize a renovation mortgage loan to purchase a home and pay for all of the necessary upgrades and repairs with one loan. Like a regular 30-year or 15-year mortgage, the loan may then be repaid over time with manageable monthly installments.

Renovation mortgages pay for expert labor, allowing repairs to be accomplished swiftly, effectively, and frequently at a cheaper interest rate than any other type of financing.

The mechanics of a renovation mortgage vary depending on the lender and program, but in general, a renovation mortgage works like this: You’ll look for a lender that offers this form of loan and submit an application. To get accepted, you must satisfy certain requirements.

If you’re thinking of rolling the cost of repairs and improvements into your mortgage, go to a respected mortgage lender first to learn about your alternatives, financing, and other criteria. Contact Leaf Management , we can go through your mortgage alternatives for home renovations and help you get the best financing for your needs.