Published on October 13, 2021 | Webster Bank
Last updated: December 4, 2025
If you’ve got a television, you’ve most likely seen them: the endless array of popular shows featuring people who buy affordable fixer-upper houses, renovate them, and transform them into dream homes in the space of a half-hour episode. Tempting, right? But whether you want to live in one or flip it for a profit, there are factors to consider when deciding whether and how to finance one.
If it’s a fixer-upper, by definition it’s going to need, well…fixing. The big question is how much repair is required. If it’s mostly cosmetic (paint, carpet, wallpaper, floors) then you may be able to handle the costs of upgrades without much worry. However, other issues could call for immediate repairs — and cost far more than you want to invest in the home. That’s why it’s always a good idea to spend the extra money for a professional home inspection that can alert you to potential expensive problems like mechanical or foundation issues.
If you decide to move ahead with purchasing a fixer-upper, you may need to look at different financing solutions when a traditional mortgage or home-equity loan won’t work Ñ if there’s too much to fix, many lenders won’t approve a traditional loan for more than the home’s current value.
Some financing options for fixer-uppers include:
A Construction Mortgage — a loan you can take with you through the entire construction process. For a brand-new home or major renovations, you can get a construction-to-permanent loan for both the building costs and the mortgage.
A Construction Second Mortgage a lending option for when you haven’t paid off your first mortgage yet or your current mortgage is at such a great rate, you don’t want to adjust it.
An FHA 203(k) loan — backed by the federal government, this loan works well for many fixer-uppers, because it includes money for both the home’s purchase price and for repairs and renovations. You’ll have to get bids for all the repairs you want to fund with the loan.
A HomeStyle loan — a Fannie Mae conventional loan similar to an FHA 203(k), but in this case, renovation costs are limited to 50% of the as-completed value.
A VA Renovation loan — available for veterans and other military service members, this loan offers the same benefits as other VA loans, such as no down payment and lower closing costs. And like an FHA 203(k), you can include renovation costs into the loan amount.
Whether you’re considering buying a fixer-upper or a more conventional home, Webster’s home lending experts are ready with the advice and assistance you need to feel more confident Ñ including personalizing solutions for your unique needs. Just stop by a banking center or contact a Mortgage Banking Officer to find out which options are best for you.
The opinions and views in this blog post are those of the authors and are not intended to provide specific advice or recommendations for any individual. Please consult professional advisors with regard to your individual situation.
All loans and lines of credit are subject to credit approval.
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