New Combined Mortgage

• If you have not purchased the property, you likely can get a mortgage that covers both the purchase price of the property and your renovation expenses. The Federal Housing Administration offers the Section 203(k) mortgage while Fannie Mae has the HomeStyle Renovation Mortgage. Additionally, private lenders may have their own mortgage products that finance both the mortgage and the renovation projects. These loans have different eligibility requirements, so you may not qualify for all of them.
  
  

Refinancing Current Mortgage

• If you already own the property and have an existing mortgage, you can get your lender to increase your mortgage loan amount to cover your renovation costs. Your lender will provide you with renovation funds and add the amount to your outstanding loan balance. Depending on your lender, your lender may base your loan amount on the increased property value after the renovation.
  
  

Conventional Second Mortgage

• If you already have a mortgage and you can't refinance, you may get your funds from a second mortgage. A conventional second mortgage provides a fixed lump sum at the beginning of the loan term. You can use this lump sum to fund your project and make regular payments toward the loan as you do with a first mortgage. This loan suits you if you have a reliable estimate of how much your renovation projects would cost.
  
  

Home Equity Line of Credit

• A home equity line of credit (HELOC) is a type of second mortgage that provides funds as a line of credit. You can withdraw up to a maximum amount of money anytime within the set withdrawal period. A HELOC will work well for you if you need to do a series of projects and don't have a clear idea of how much they would cost. With a HELOC, you only have to pay interest during the withdrawal period. Once it ends, you have to pay the loan balance within a set time.