Is a 'fixer-upper' right for you? (Part Two)


Tracy Wick

Thanks to an increasing number of home renovation TV shows, fixer uppers are becoming more and more popular among homebuyers. According to’s latest spring homebuyer survey, 60 percent of buyers now consider homes that need renovating.

These homes that need renovations or updates are often listed at a significantly lower price than other turnkey homes in the area. This can help buyers expand their search to more desirable zip codes or property types that they may have not been approved for otherwise.

What if you want to turn your fixer upper into your dream home but don’t have the funds to complete the repairs? Is it possible to work the price of the home renovations into a mortgage? The answer is yes.


How to fund your fixer upper

The good news there are several private loans and government backed programs available to borrowers. Let’s take a closer look at some of these loans.

• FHA 203(K)

This program allows buyers to borrow the money needed to fund repairs and improvements as part of their mortgage, rather than requiring an additional repair loan.

The first step after finding your fixer upper is to obtain a written estimate from the licensed remodeling contractor who will serve as the general contractor on the project. This estimate will enable you, and the lender, to determine the cost of the repairs.

Next, your lender will order an appraisal of the property. The appraiser will factor in the future repairs and how it will affect the value of the home. As long as the property will be worth the costs to complete the renovations, you will be approved for an FHA 203(K) loan.

There are some additional requirements such as credit score and debt-to-income ratio so consult with your lender on the specific loan qualifications.

• VA Renovation Loans

Veterans, active military members and surviving spouses may qualify for a VA renovation loan. VA loans provide several benefits over other loan products, such as zero down payments and higher debt to income ratios.

Similar to the FHA 203(K) loan, a VA Renovation Loan will cover the purchase as well as the estimated repair costs. Borrowers can finance 100% of a new home purchase and get a second loan for up to $35,000 to pay for renovations. Check with your loan officer for complete details.

• HomeStyle Renovation Mortgage

The Federal National Mortgage Association (often referred to as Fannie Mae) offers a renovation loan for a new purchase or an existing property.

This loan allows borrowers to finance home improvements for up to 75% of the property’s appraised value once the upgrades are completed.


Utilizing Home Depot’s consumer or “project loan” credit card

If Home Depot is your home improvement store of choice, they offer special financing to fund larger renovation projects. This card has a low fixed rate and allows you to buy materials with special offers that reduce the amount of interest you pay.


Lowe’s credit card

Another way to finance your renovations is to apply for a Lowe’s credit card. One advantage of the Lowe’s card over Home Depot’s their rewards program — offering 5% off everyday purchases.

(See chart comparison between Lowe’s and Home Depot at


Tracy Wick is a Northville real estate agent with over 25 years of experience as a real estate consultant and client advocate in Michigan. Tracy is an Associate Broker with Keller Williams and she can help guide you through your new home search for the perfect fixer upper home. Tracy also has a list of preferred lenders that she works with regularly who can help you turn your dream of homeownership into a reality. Find more articles on buying, selling, elder transition and estate settlement at or contact her directly at 248-912-7407 or