Renovation Loans – Financing Options for Your Fixer Upper

Renovation Loans - Home Renovation Loan for Fixer Upper or Flip

How Do Renovation Loans Work?

This article is about renovation loans as well as mentioning alternative options you might not have thought about. So how do renovation loans work?

Typically you would look for a mortgage type financing option. We will go into more detail below on breaking those options out. You can then decide on your own which is best for you in your situation.

When you apply for a home renovation loan, most of the time you will be required to have a minimum credit score. You will also need to put up some money for a down payment percentage. Each loan will vary for the requirements.

If you have a smaller budget, say less than $35,000 you may have some other options to choose from. When the budget is going to be over $35K in repairs for a home renovation you will typically have more requirements to meet to get the loan.

Ok so let’s dig into the types of renovation loans out there and what are the best financing options for your fixer upper.

Financing Options for Your Fixer Upper

There are a few options and alternatives you can choose from when picking out a home renovation loan.

Fannie Mae’s HomeStyle Renovation loan – When you apply for this type of loan you will need a credit score of roughly 620 or above. You will need at least 5% down payment and a certified contractors estimate of the work to be done. This is just one loan, but the actual money portion for the renovation is put in escrow and paid directly to the contractor. This type of renovation loan can be used for a purchase of a fixer upper or to upgrade an existing home.

FHA 203(k) loans This renovation loan is issued by the federal housing authority and requires only a 3.5% down payment. It also typically has a lower credit score requirement. The limited FHA 203(k) is capped at 35K and would be used for cosmetic improvements. The standard type can be used for major renovations, but will require you to hire an approved consultant to monitor the entire project from start to finish.

Home Equity Loan – The home equity loan is always an option if you have enough equity in your home, but will also require you secure it with your home as collateral. This is known as a secured loan.

Private Money Lenders and Hard Loans – When you are doing a flip or fixer upper, you will find private lenders who are willing to lend the money at a higher interest rate of course. They will secure the property with a lien and you will pay them a higher interest rate to borrow the money quickly. You can then pay them back once you sell the fixer upper or flip. This usually requires some research on your part to find a good private money lender you can trust and build a good relationship with.

If you get into the business of buying fixer uppers and flipping them for a profit this can be a source for quick funding.

Are There Unsecured Personal Loan Options?

Most people have smaller repairs and renovations that do not require more than $35,000. If you have good credit you could apply online for an unsecured personal loan. The advantage is that it does not require collateral and it is a quick way to get money you need for the renovation.

Below we list options for you to utilize for a fixer upper that you want to flip or to do a home renovation.

Peer-to-peer lending has gotten very popular. It is where individual investors fund loans for borrowers.

To review options for peer-to-peer lending you can visit

Using a lending network has also become a great way to get an unsecured personal loan.

For this option you can visit

The advantage to using this type of unsecured loan is that you can avoid using your home as collateral. You will also not have to put a down payment down or go through as much paperwork. It will also not require you to hire contractors or consultants. For smaller renovation loans and projects, an unsecured personal loan is something many people are not even aware of or think of as an alternative.


All of these are good options for any type of home renovation, fixer upper or flip. You have to weigh all the alternatives and make your own decision on what is best for you. This covers most options from a very expensive renovation to a smaller one that is less than $35,000. Always compare all of your options and the details of each before making a decision. Good luck with your home renovation or fixer upper project.