The home-buying process can sometimes be stressful, especially if you can’t find the “perfect” one. As with all things that we might one day cherish, finding your dream home may take some time. What’s even more stressful is that when you do find it, will it be within your budget? It could be, but it could also be beyond your budget, so what do you do?

In today’s market, it’s more important than ever to put an offer in when you find a home that could work for you. So, if you find a home that ticks most of what’s on your checklist AND is within your budget, you might as well put in an offer and do some renovations to bring it to the level of “perfection” that you desire.

That’s where renovation loans come in. They’re a wonderful option if you’re a person who wants a fixer-upper or you just can’t find a home that’s exactly right for you.

What is a Renovation Loan?

In essence, a renovation loan is a type of mortgage loan that allows a homebuyer/borrower to roll together a home (purchase price) and renovation costs. Essentially, you’re financing the cost of renovations into your purchase or refinance. This allows you to estimate what repairs and updates you want to make to your home while obtaining the funds to do them.

How Can You Use It?

Renovation loans can be used on a purchase or refinance. It works for purchases because it allows you to buy a less-than-ideal home and make changes to bring it up to your standards. For refinances, you can roll in renovation costs to make any necessary repairs or changes to your existing home that will make it last longer. The best part about renovation loans is that you can finance for the “as-completed value,” which means you can finance how much the house will be appraised for once the renovations are done. This is a great way to improve your house, build value, and finance your home.

How to Use a Renovation Loan

There are a few different reasons renovation loans are worth considering. First, the housing market today is incredibly fast paced, with low inventory and high prices. A renovation loan allows you to make decisions quicker since you can choose homes you may not have considered over one that’s move-in ready since you will be given a chance to renovate them anyway.

Second, it gives you the option to spruce up your old place without having to trouble yourself with moving into a more modern place. Since you can refinance with a renovation loan, you might even be granted a lower rate or shorten your term while securing a budget for things that will extend the life of the home you love so much already.

Lastly, a renovation loan is a tool that gives you endless solutions as far as the changes you’re trying to make. You can use the funds from a renovation loan to make repairs, renovate, OR you can choose to give your home more value by expanding your home. The only restriction with a renovation loan is that you can’t use it to take your home down to the studs or demolish and rebuild.


They say home is where the heart is. So, when looking for your dream home, don’t be disheartened when you can’t find the perfect one right off the bat. Your perfect home might just be under your nose, and all you need to do is to have a closer look at it. It may not be the ideal home, but it could be after a little repair and renovation. Thus, renovation loans play a huge role in opening up options to create your dream home without having to build it from the ground up. Ready to get the process started? Contact an experienced lender at Total Lending Concepts in Colorado Springs today.