While move-in ready homes are great, you may consider getting a house that needs a little TLC. In many cases, you can actually secure home renovation loan options that are more than the purchase price to repair the house and make it your own. 

FHA-approved mortgage lenders offer home repair loans, like the FHA 203k loan known as Rehab Mortgage Insurance, that include the purchase price for the home plus additional funds for the cost of repairs. In some cases, the loan may be 110% of the home’s estimated value after the repairs are finished.

There are some factors to qualify for this loan. For one, the cost of the repairs must be at least $5,000 or more. The repairs must make the house safer, more environmentally friendly, and more livable, thus raising its value. 

The repairs must be completed within six months of purchasing the home. Also, you may need to work with an FHA home repair loan agent to keep the repairs on schedule and within budget. 

Plus, depending on the circumstances, you may be required to hire FHA-approved construction contractors to complete the repairs.

Fannie Mae’s HomeReady mortgage allows you to add on a renovation loan to your original mortgage so you have the money you need to make the necessary repairs. This loan addition is known as the Fannie Mae HomeStyle Renovation loan, and with it you can get up to 75% of your property’s value. But this money must be used for home repairs and improvements.

Government home improvement loans provide home repair financing with lower interest rates than you’d likely get when taking out a home equity line of credit (HELOC). Some homeowners may even qualify for zero-interest home improvement loans, though they’re few and far between. 

What’s more, a housing loan for renovation can help people who don’t have equity in their home, such as people who are in the process of securing a loan for a fixer-upper, get extra money to improve their home’s look, safety, and property value.

Sometimes, homeowners buy a home and later find out that they need extensive and major repairs. If you already have an FHA, Fannie Mae, or Freddie Mac mortgage loan and need to repair your house ASAP, you might look into refinancing your loan and including the money you’d need to make repairs. 

You can also look into options like the HUD Title I Property Improvement Loan Program, which allows you to make improvements and updates, like adding dishwashers and other appliances or making the house more accessible if you have a disability.