Quick answerCheck free or forgivable help first—local housing rehab programs, USDA Section 504 in rural areas, weatherization, and nonprofit repair programs. If you need to borrow, match the loan to the project: FHA 203(k) or Fannie Mae HomeStyle for buying or refinancing with renovations (Limited 203(k) now allows up to $75,000 in repairs), home equity loans or lines if you have equity, and FHA Title I for smaller improvements. Compare APR and total cost, and never pay a contractor in full upfront.
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Start with free or low-cost help

  • Local housing rehab programs (often CDBG or HOME-funded), frequently as grants or deferred, forgivable loans for low-income owners
  • USDA Section 504 repair loans (1%) and grants (62+) in rural areas
  • Weatherization Assistance Program for energy repairs
  • Nonprofits such as Habitat for Humanity home repair, Rebuilding Together, and faith groups
  • Utility programs for efficiency upgrades
  • VA grants for disabled veterans

See home repair assistance.

Borrowing options

Option Best for Key points
FHA 203(k) Limited Buying/refinancing with moderate repairs Up to $75,000 in rehab costs; no structural work
FHA 203(k) Standard Major or structural renovation Requires a 203(k) consultant; minimum $5,000
Fannie Mae HomeStyle / Freddie Mac CHOICERenovation Conventional renovation loans Can include a wider range of improvements
FHA Title I Smaller improvements without much equity FHA-insured loans from approved lenders
Home equity loan Defined projects if you have equity Fixed rate; second lien on your home
HELOC Ongoing or phased projects Variable rate; draw period then repayment
Cash-out refinance Large projects when rates are favorable Replaces your mortgage; closing costs
Personal loan Small, urgent projects Unsecured; higher rates
PACE Energy/resilience upgrades Repaid through property taxes; senior lien; review carefully

Compare the full cost

For each option, compare the APR, fees, monthly payment, total repaid, lien position, and what happens if you sell or refinance. A lower monthly payment over a longer term can cost more overall.

Plan the project

  • Get a clear scope of work and at least three written bids.
  • Check permits and licensing requirements.
  • For older homes, ask about lead-safe practices (pre-1978).
  • Build a contingency of 10–20% for surprises.

Protect yourself from contractor problems

  • Verify license and insurance.
  • Use a written contract with scope, price, timeline, and payment schedule.
  • Pay in stages tied to completed work; avoid large upfront payments.
  • Get lien waivers from contractors and suppliers.
  • Be wary of door-to-door offers, “leftover materials” pitches, and contractor-arranged financing.
  • Know your three-day right to cancel for many door-to-door sales and home-secured loans.

Comparing two financing options: an example

A homeowner needs a $20,000 roof and HVAC repair.

Home equity loan Personal loan
Rate (example) 8.5% fixed 13% fixed
Term 15 years 5 years
Monthly payment about $197 about $455
Total paid about $35,450 about $27,300
Secured by home? Yes No
Closing costs Possible Usually none (origination fee possible)

The home equity loan has a lower monthly payment but costs more over time and puts the home at risk if you default. Rates here are hypothetical—compare real offers.

Questions to ask any lender

  • What’s the APR, and what fees are included?
  • Is the rate fixed or variable? If variable, what are the caps?
  • Is there a prepayment penalty?
  • Will this be a lien on my home?
  • How are funds disbursed (lump sum or draws tied to work completed)?
  • What happens if the project costs more than expected?

Special cases

  • Disaster repairs: SBA disaster loans may offer lower rates than private loans in declared areas. See disaster housing assistance.
  • Accessibility modifications: look for grants and VA or Medicaid funding first. See accessible modifications.
  • Older homeowners: some reverse mortgage borrowers use proceeds for repairs, but consider costs carefully. See reverse mortgages.
  • Manufactured homes: financing options differ; see manufactured homes.

Frequently asked questions

Is FHA 203(k) a grant?

No. It’s a mortgage that combines the purchase (or refinance) and renovation costs into one FHA-insured loan. The Limited 203(k) allows up to $75,000 in repairs for loans originated since November 4, 2024; the Standard 203(k) handles larger or structural projects with a consultant.

What is PACE financing?

Property Assessed Clean Energy financing pays for energy or resilience upgrades and is repaid through your property tax bill. It can carry high costs and creates a senior lien that can complicate refinancing or sale. Federal rules now apply ability-to-repay standards to residential PACE.

Can I use a credit card or personal loan?

For small projects, maybe, but rates are often high. Compare total cost, and avoid contractor-arranged financing you haven’t reviewed independently.

Sources and verification

Use these sources to check program rules. Funding, openings, and local procedures must be confirmed with the agency handling your application.

  1. 203(k) Rehabilitation Mortgage Insurance ProgramU.S. Department of Housing and Urban Development
  2. Mortgagee Letter 2024-13: Revisions to the 203(k) programU.S. Department of Housing and Urban Development
  3. Title I Property Improvement LoansU.S. Department of Housing and Urban Development
  4. What you should know about home equity lines of creditConsumer Financial Protection Bureau

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Published by Housing Assistance Info

Independent guidance based on the sources listed above. Read our sourcing, automated-tool, and correction policies.