If you love hands-on projects and are thinking about purchasing a new home, investing in a fixer-upper could be right up your alley. Fixer-uppers give new homeowners the chance to infuse their new space with their personal style, while also building sweat equity. Here are a few varieties of mortgage loans you should consider if you are thinking about purchasing a home that needs a little love. 

3 Types of Mortgage Loans for Fixer-Uppers

1. Conventional Loans

Both the Fannie Mae HomeStyle® renovation loan and the Freddie Mac renovation mortgage are conventional loans that give buyers the chance to finance the home and an amount necessary for repairs into a single loan. 

The Fannie Mae HomeStyle® loan offers both 15 and 30-year fixed-rate mortgages and the opportunity to qualify for the mortgage with as little as 3% down. If the home you want to buy needs extensive renovations, you may be interested in adding Fannie’s Community Seconds® mortgage on top of your Fannie Mae HomeStyle® loan, which allows you to borrow up to 105% of the home’s purchase price. 

Freddie Mac renovation mortgages are eligible for primary, investment, and second homes, and offer 15, 20, and 30-year terms. Down payment requirements are slightly higher with Freddie Mac renovation loans, and buyers will need 5% down for a single-family property, 15% down for a two-unit home, and 20% down for three or four-unit properties.

2. FHA 203(k) Loans

If you are concerned about your credit score, you may be interested in an FHA 203(k) loan, which is federally insured. These loans are available with fixed-rate or adjustable-rate terms and repayment timeframes.

When you get an FHA 203(k) loan, a portion of the amount goes towards paying the seller, and a portion is put into an account that you can draw from to pay contractors to complete the necessary work.  

3. VA Home Improvement Loan

If you have served in the military or are a surviving spouse of someone who served, you may be eligible for a VA Home Improvement Loan, provided you have a credit score of 620 or higher.

Backed by the VA Administration, these mortgage loans require little to no down payment and low closing costs and allow a portion of the loan to be disbursed to VA-approved builders to make changes to your property. 

If you are ready to become a homeowner, start looking at your mortgage loan options with Magnolia Bank in Hodgenville, KY. With a commitment to excellence and customer service, this trusted financial institution can help with everything from everyday checking and savings accounts to auto loans, construction loans, and revolving lines of credit. To learn more about how they can help you to fulfill your dreams, visit their website, or give their office a call at (270) 358-3183.