With the current market’s low inventory and high prices, buyers are struggling to find entry-level or starter homes. There is one type of home they can afford to buy, though: fixers. These also aren’t in high demand, so competition isn’t as fierce. The problem is, first-time homebuyers typically don’t want to spend extra or can’t afford the additional cost of fixing up their homes. But that can be resolved with home renovation loans.
Two common home renovation loans are the FHA 203k loan and the Fannie Mae HomeStyle loan. Both require a minimum credit score of 620 and a minimum down payment of 3%. They cover most home improvements, including both structural and cosmetic. However, keep in mind that the FHA 203k loan can only be used for primary residences, while the HomeStyle loan can be used for both primary residences and investment property.