Renovation Loans in Durango, CO
Renovation Loans in Durango, CO
Buy the house and fix it with one loan
Found a Durango home with good bones that needs a new kitchen, a roof or a furnace? A renovation loan lets you finance the purchase and the repairs together, based on what the home will be worth when the work is done. I offer two kinds: FHA 203(k) and Fannie Mae HomeStyle. I’m Peter Pritchard, a Durango mortgage lender for 28 years, and I help buyers across Durango, Bayfield and La Plata County turn fixer-uppers into homes.
What a renovation loan can pay for
- Kitchens and baths: cabinets, counters, fixtures, flooring and appliances that stay with the home.
- Roof, siding and windows: including insulation and energy-saving upgrades.
- Systems: furnaces, boilers, water heaters, electrical, plumbing, and well and septic repairs.
- Accessibility: ramps, wider doorways and bathroom changes.
- Bigger projects: structural repairs, additions and major remodels (Standard 203(k) or HomeStyle).
- Upgrades FHA doesn’t cover (HomeStyle): pools, landscaping, outdoor kitchens and other permanent improvements.
FHA 203(k) or Fannie Mae HomeStyle?
FHA 203(k) is for a home you’ll live in (1 to 4 units) and has more flexible credit rules. It comes in two types:
- Limited 203(k): repairs up to $75,000 that aren’t structural. No consultant is needed, and the work has 9 months to finish.
- Standard 203(k): projects of $5,000 or more, including structural work and additions. A HUD-approved 203(k) consultant writes up the work and inspects each stage, the work has 12 months to finish, and if you can’t live in the home during the work, up to 12 months of mortgage payments can be built into the loan.
Fannie Mae HomeStyle is a conventional renovation loan. It works for a home you’ll live in, a second home or a rental (1 unit), allows upgrades FHA doesn’t, like a pool or landscaping, has no upfront mortgage insurance, and gives the work 15 months to finish. It usually needs stronger credit than FHA.
Either way, the repair money is held at closing and paid to your contractor in stages as the work gets done. Try the renovation loan calculator to compare what each could cover.
How a renovation loan works, step by step
- Get pre-approved so you know your price range before you shop.
- Find the home and get written bids from a licensed contractor. In Durango, start early: the building season is short and good contractors book up.
- Work write-up: for a Standard 203(k), a HUD-approved consultant inspects the home and writes up the work and costs. For HomeStyle, your contractor’s plans and bids are reviewed instead.
- Appraisal: the appraiser values the home as it will be when the work is finished.
- Close on one loan: the repair money goes into an escrow account, along with a contingency reserve for surprises.
- Work gets done: your contractor is paid in stages after each inspection. Anything left in the reserve goes toward your loan balance.
Already own your home? A renovation can also be financed with a home equity loan or HELOC, which lets you keep your first mortgage. Buying with FHA for the first time? See FHA loans. For a side-by-side look at both programs, read my guide to fixer-upper loans in Durango.
Talk to a local renovation lender
Call or text me at 970-828-1610 or send me a message. Tell me about the home and the work, and I’ll tell you honestly whether a 203(k) or a HomeStyle loan fits, or whether another option makes more sense. FHA 203(k) loans are for homes you’ll live in; HomeStyle also works for second homes and rentals.