- 9841 Washingtonian Blvd #200 Gaithersburg, MD 20878
I want to buy a house that needs some repairs.
Renovation Loans for Buyers and Investors
RENOVATION LOAN OPTIONS
💡Cash
Many homeowners cover renovations with cash, which ensures you’ll finish the project interest-free.
Setting aside money each month can help you build up savings for future home improvement projects and necessary fixes.
For do-it-yourself and other projects that don’t require full payment upfront, breaking up payments over the course of the renovation helps fit the project into your budget.
When it’s best: Use cash when doing so won’t disrupt other financial goals or exceed your monthly budget.
💡 Personal Loans
• Unsecured personal loans can help homeowners finance a project quickly. Most lenders can fund a loan within a week, in contrast to home equity financing, which involves time-consuming underwriting and appraisal processes.
Rates on personal loans are from 6% to 36%, which is higher than most home equity options but lower than some credit cards. There are home improvement loans for borrowers with bad credit (scores below 630), but the lowest rates are reserved for good- and excellent-credit borrowers.
Repayment terms on most personal loans are from two to seven years, but some lenders offer terms of up to 12 years for home improvements. A shorter term raises your monthly payments, while longer terms cost more in total interest.
Many online lenders offer pre-qualification to let borrowers see their potential rate, loan amount and monthly payment. Since these loans come in a lump sum and are repaid in fixed amounts, you can plan for them in your monthly budget.
When it’s best: Because personal loans are funded quickly, they’re good options for urgent repairs or projects you want to start quickly. They can also cover larger projects if borrowing against equity isn’t an option.
💡Credit Cards
For small home improvements, consider a 0% APR credit card that you can pay off during the interest-free period, typically 15 to 18 months. You’ll need good or excellent credit (a score of 690 or higher) to qualify for these cards.
Some cards give rewards on certain purchases, including home improvement expenses. Retail cards also offer special financing or promotions, which can make sense if you’re buying most of your supplies from the same store.
When it’s best: Using credit cards can help you accomplish smaller DIY or short-term projects that don’t exceed a few thousand dollars.
💡Government Loans
The government offers Title 1 loans for qualified borrowers who want to make specific updates to their home, including buying appliances, making your home more accessible or improving its energy efficiency.
You can borrow up to $25,000 for a single-family home, and repayment terms are typically up to 20 years.
Title 1 loans above $7,500 require your home as collateral. First time home-buyers must be in the home for 90 days or longer before they can borrow.
Not all lenders offer government loans. Search the lender list at Housing and Urban Development for one that lends in your state.
When it’s best: If your project qualifies for this type of loan, it can pay for all or some of the project.