Different loan for renovations?

You don't need two separate loans. There are loan products specifically designed to finance both the purchase and the renovation in one mortgage. The FHA 203(k) loan is the most common option. It lets you buy a home and finance the renovation costs into a single loan. There are two types. The Standard 203(k) is for major renovations over $35K and requires a HUD consultant to oversee the project. The Limited 203(k), formerly called the Streamline, covers up to $35K in repairs and is simpler with less paperwork. Both require FHA-approved contractors and the work must be completed within a set timeframe after closing. Fannie Mae's HomeStyle Renovation loan is a conventional alternative that works similarly. You finance the purchase price plus renovation costs in one loan, and the appraiser bases the value on what the home will be worth after the renovations are complete. This program has fewer restrictions on the type of work you can do compared to the 203(k). Freddie Mac also offers the CHOICERenovation loan, which works the same way. The main advantage of these loans is that you only have one closing, one monthly payment, and one set of closing costs instead of financing the purchase and then taking out a separate construction loan or home equity line for the work. The rate is typically close to a standard mortgage rate, and you can finance everything from structural work to cosmetic updates. Talk to a lender who has experience with renovation loans specifically. Not every loan officer handles these regularly, and the process has more moving parts than a standard purchase. You want someone who has done them before and knows how to keep the project on track.

Good news: you don't need two loans. A renovation loan wraps the purchase price and the cost of repairs into one mortgage, and the loan amount is based on what the home will be worth after the work is done, not what it's worth today. That's actually a big advantage since it means you can buy a beat-up home at a lower price and borrow against its future value. The two most common options are the FHA 203(k) and the Fannie Mae HomeStyle. FHA is easier to qualify for but comes with more oversight on how the money gets spent. HomeStyle is more flexible on what you can renovate but typically needs stronger credit. Either way, you'll need contractor bids ready before you close since the lender needs to know exactly what the money is going toward. The angle most buyers miss is that this can actually be a smarter buy than purchasing a move-in ready home. You're paying less upfront for the property, financing the improvements at mortgage rates rather than credit card or personal loan rates, and building equity from day one as the renovations increase the home's value.

203k loan can be a good option. Also connect with Feeasy that can do loans like this.

No need for two loans. There are special loans for homes like this. Talk to a local lender who maybe can sit down with you and go over all your options.

I highly recommend you call a local mortgage lender in your area. There are renovation loans out there known as 203K Renovation. Based on your situation, the lender will give you the best advice. Any real estate agent in your area should be able to refer you to someone as well. Good luck!

Maria, Im a realtor here in Devine, would you like me to connect you to my local lender? 210-860-2974