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How to Pay for a Home Renovation

Have you been wanting to renovate your home but just haven’t figured out how to finance it yet? A renovation loan can help you make the home repairs you’ve been planning for. Whether you want to increase your home’s value, add more space, improve features or make your home more energy efficient, a renovation loan can help you make those changes now, without having to tap into your savings or run up your credit cards.

What is a home renovation loan?

A home renovation loan is a type of mortgage that helps borrowers finance home repairs and improvements. Depending on the loan type, a home renovation loan can also finance the purchase and renovation costs of a fixer upper. A home renovation loan can be used to make cosmetic updates as well as a complete overhaul of your home.

How do home improvement loans work?

If you are seeking financing to update your current home, you can refinance your current mortgage into a renovation loan, put your current equity towards improvement costs, and still have the convenience of only  one monthly payment.

When you find a fixer-upper on the market that you want to buy and bring back to life, a home renovation loan will help finance the purchase of the home as well as the renovation costs. By rolling your mortgage and renovation  into one loan you’ll only have to make one monthly payment.

What are the types of home renovation loans?

Every renovation project is unique, so it is important to have more unique renovation mortgage options to choose from. PrimeLending offers more than 23 types of home renovation programs to help you find the right loan for your project. Some of the most common types of home renovation loans include:

  • EZ “C”onventional—When cosmetic improvements are your goal, an EZ “C”onventional is just the ticket. An EZ “C” helps finance smaller modernization projects that may often be requested by an appraiser or a borrower.
  • VA Renovation Loan—For Veterans and active-duty military members, a VA renovation loan can help finance home improvement projects or the purchase and renovation of a home while offering the same benefits of a traditional VA mortgage like no down payment* and higher loan amounts.
  • FHA 203(k)—If you are searching for renovation financing with lower down payment requirements, an FHA 203(k) could be just what you need. The FHA 203(k) Limited loan can cover the costs of cosmetic upgrades that usually have a quicker turnaround like replacing the roof or updating your HVAC system. Alternatively, the FHA 203(k) Full/Standard loan helps finance structural repairs and major renovations like adding more square footage, creating an open floorplan, or upgrading flooring.
  • Repair Escrow—A repair escrow is an account set up and managed by your lender to pay for the expenses of your renovations. Repair escrows are commonly used to buy and renovate foreclosed properties as well as making any required or buyer-requested repairs.
  • Pool Escrow—If your dream backyard always included a pool, a pool escrow can help bring your vision to life. You can get a pool escrow on a conventional or jumbo loan to set aside funds to add a pool to your home and the costs will be rolled into your mortgage.
  • HomeStyle®/CHOICERenovationSM Loans—A Fannie Mae HomeStyle® or Freddie Mac CHOICERenovationSM mortgage can help finance buying a fixer-upper or updating your current home. Common renovations covered by these loan options include interior and exterior upgrades, adding a new fence, and building a new deck, among other repairs.
  • Green Home Loans—When you want to make eco-friendly updates to your home, you need a renovation home loan that can cover the costs of making green upgrades to your home. A Green Home Loan can help finance solar panels, new insulation, energy-saving HVAC systems and appliances, and installing energy-efficient windows and doors.

When it’s time for your renovation, let the experts at PrimeLending help you find the home renovation loan the suits your project and home goals. Contact your local loan officer today to learn more.

*Down payment waiver is based on VA eligibility.

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Becky B.

Becky Bruning is an accomplished copywriter with a wealth of experience in the field and has honed her skills over the past seven years to become a sought-after writer. Based in Dallas, Texas, Becky has built a reputation as a reliable and talented professional, delivering top-quality content across a range of industries. As Digital Content Writer for PrimeLending, she works to develop and execute content marketing assets that drive engagement and growth. She specializes in creating content that is both informative and entertaining, utilizing her knowledge of copywriting and marketing to craft compelling pieces that resonate with audiences. Becky's skill set is extensive, encompassing a range of competencies that make her a valuable asset to any project. Her expertise in crafting SEO-friendly content, creating engaging blog posts, and writing engaging scripts have made her a go-to resource for improving an online presence. She also has experience in social media management and email marketing, giving her a holistic understanding of the digital landscape. Becky holds a Bachelor of Arts degree in Advertising from Iowa State University. Her work history includes stints as a Copywriter for a SaaS startup, a Proofreader, and a Journalist, Designer and Copywriter for a news publication. Each of these roles has provided Becky with valuable experience, helping her to refine her craft and develop her expertise. In her free time, Becky enjoys reading, writing fiction, and crafting. She is an active member of the area writing community to learn from and connect with other local authors. Becky is passionate about her work and is always looking for new opportunities to challenge herself and grow as a writer.

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