Home improvement loans and grants can pay for expensive repairs and renovations. The most common government loan programs for home purchases and construction help qualified residents to buy, fix, and improve their properties.
While owners do not need to pay back a government home improvement grant, they will need to set up a repayment plan for loans. Government assistance options are often better than financing from private lenders, and low-income borrowers are more likely to receive funding. Check out the available home improvement grants and loans to cover the cost of home projects.
Home improvement grants help property owners make necessary repairs and changes to keep a home safe and sanitary for no cost. The government also provides home improvement loans with low-interest rates and better terms than other financing options.
Many loans for renovations have high-interest rates and short repayment periods. Owners looking to renovate their fixer-upper can end up with balloon payments – or still owe a substantial amount at the end of the term.
The Federal Housing Authority (FHA) backs FHA 203k loans so lenders can offer more favorable terms to borrowers. FHA loans also go by names like Rehab Mortgage Insurance, Rehab Loan, and FHA Construction Loan.
The loans provide borrowers with funds to cover the costs of needed repairs and renovations for properties. Prospective owners can get an FHA loan to finance the home purchase and renovation into one single mortgage payment.
Some types of renovations that this loan include:
- Improving accessibility for a disabled person.
- Improving the appearance or eliminating undesirables.
- Making energy efficiency improvements.
- Making major landscape and site improvements.
- Modernizing the home’s functions.
- Removing health and safety hazards.
- Replacing floors and treatments.
- Replacing roofing, gutters, and downspouts.
- Updating or fixing plumbing, water, and sewer systems.
The minimum rehabilitation cost is $5,000, meaning applicants cannot request a loan or refinancing amount less than the minimum. Applicants needing money for purchasing and renovating may secure a loan for the purchase price and at least $5,000 more. Likewise, owners refinancing with an FHA 203k loan should have construction costs higher than the minimum.
The government does not give loan money directly to the borrower. FHA insures the loan, which means the department will step in if the borrower defaults on the mortgage. The government would then take over possession of the property.
Current and prospective homeowners will need to apply for these funds through the following channels.