Purchase + Renovation Financing: What Actually Works (And What Doesn't)

This couple found a house for $725K that needs $150K in work. They want to put $80K down.

Their question: Can a bank give us a mortgage for the purchase PLUS the renovations?

Short answer: Not the way they're thinking.

Here's how purchase + renovation financing actually works:

Option 1: Purchase Plus Improvements Mortgage

• Some lenders offer this (it's not common)

• They'll give you the purchase price PLUS up to a certain amount for renovations

• But you need contractor quotes, a scope of work, and lender approval for the reno plan

• Max is usually around $40K in reno funds, not $150K

Option 2: HELOC After Purchase

• Buy the house with a regular mortgage

• Set up a HELOC (Home Equity Line of Credit) for renovations

• Access it as needed during the reno

• But you need enough equity for this to work

Option 3: Come to Closing with More Cash

• If they can't get renovation financing built in, they need closer to $230K total ($80K down + $150K renos)

• Most first-time buyers don't have that

The reality for this couple: They're likely capped at $40K in approved renovation financing through a purchase + improvements product.

For $150K in work, they need a different plan.

This is why I always ask: "What's the REAL all-in number?"

Because falling in love with a fixer-upper without a financing plan is a fast track to heartbreak.

Looking at properties that need work?

Let's talk about realistic financing options BEFORE you fall in love.

___________________________________

Got other questions? You can book your free 15 MIN. MEETING call - no pressure, no sales pitch.

Just clarity.

Talk soon,

Fred Camingal