Home loans question

[underwaterrhymes]

So if you get a home loan for a certain amount, can you buy something for less and use the rest for renovations?

Or what if you find a lot (not super common up here) and want to build on it?

[teeah22]

I believe that in general, they won't loan you more than what the house appraises for. I know there are renovation loans you can get though.

[TrickyBob]

They make loans specifically for renovations if you go that route. (we tried that with a house we were going to buy before this one, but it was too finicky)

Or, yes, you can borrow more than you need in order to do renovations. (Friends of ours are buying a rental and borrowing about 10 grand more than the house is selling for, in order to update it)

That doesn't mean it will always go through though.

[underwaterrhymes]

Okay. Good to know - thanks!

[goaskalice]

That's called a 203k loan. It's an FHA program and there are some downsides to it in terms of how long it takes to close due to the nature of the loan. But my buyers got an amazing house and added on a beautiful master suite with the loan, so they are great if the house you love needs work. If you have questions feel free to ask or pm me as I am pretty familiar with them.

As for building, there are special construction loans for that.

[thinkofthesoldiers]

You should start looking around some different bank websites. You will find all kinds of loan information. Or post over on MM. They know their stuff and/or where to point you for more information.

[Deleted]

Ditto the others that you need a special home loan for this. With a typical loan, you can only borrow up to the appraisal amount. With 203k loans, I'm pretty sure you have to give the lender very specific info about the various projects, who you are using, etc, and I've read that this process can be a bit of a pain. I sort of wish we had done this with our house, though, so we could have renovated all at once instead of doing it slowly.

[underwaterrhymes]

Okay, cool.

We're in our late 30s and this is the first time we're even looking into buying. We're working through pre-approval right now and plan on checking out some of the neighborhoods we're considering tomorrow.