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If you’re like many homeowners, there are some things about your home that you inherited from the previous owner that are not quite to your taste. Maybe it’s the yellow wallpaper, the laminate countertops, or the popcorn ceilings. Your plan was to make updates once the home was yours, but it’s hard to know what home financing options are available to help with your home renovations.
Undertaking home renovation can seem like a huge task, but don’t let it deter you from creating your dream space.
Home Renovation Loans
There are two types of loans that can support you in your renovation, and both are 203(k) loans, which are- FHA-backed loans that can be used to refinance an existing home through repairs, updates, or renovations.
The first option available is a Limited 203(k) renovation loan, which is intended to help with less complicated home improvements. Like the name suggests, there are some limits to this loan. The maximum repair amount allowed is $35,000, with no minimum requirement, and it does not cover plans, consultants, engineers, or architects.
The Limited 203(k) is the loan you want for removal of that yellow wallpaper. It will cover the cost of removal, new paint, painters, etc. It can also help you hire workers to scrape the popcorn ceilings clean and finish them off with a fresh coat of paint.
The second type of renovation loan available is the Standard 203(k) renovation loan. Varying slightly from the Limited 203(k), the Standard 203(k) has no maximum repair amount, but it has a minimum of $5,000 in repairs or improvements.
Say goodbye to your outdated countertops and hello to your dream kitchen. With the Standard 203(k), you can hire the architect and engineers needed to design a brand-new kitchen or other complex, major rehabilitation improvements to your home. It also covers all the actual work and materials for the project.
Weighing Your Options
There are a few constraints of the renovation loans you should consider before making the decision to apply. For instance, be aware that no do-it-yourself renovations are allowed. As much as you want to channel your inner HGTV house flipper, the 203(k) loans only cover professional projects. All contractors must be vetted as well.
Now you can look back at that list of improvements you promised you’d complete when you first moved in. With a 203(k) loan, you can make your house your home.
