How to Finance a Fixer-Upper Home: Guide to Loans & Financing
What is a Fixer-Upper Home?
A fixer-upper home is a property that requires repairs, renovations, or updates, but is generally still structurally sound. These homes are typically sold at a lower price (15-20% less in San Diego) than comparable homes in better condition, making them attractive to buyers who are willing to invest time and money into improvements.
Common characteristics of fixer-uppers include visible wear and tear, such as outdated flooring, peeling paint, or damaged fixtures. They may also have aging or malfunctioning systems like plumbing, electrical wiring, or HVAC units, and sometimes even code violations or unpermitted work from past renovations. Curb appeal is often lacking, with issues like overgrown landscaping or damaged siding.
Although they can vary widely in condition, fixer-uppers are not typically considered teardowns, nor are they always uninhabitable. Many buyers are drawn to these properties for the potential to customize the space, build equity through renovations, or flip them for a profit.
At Buildable, we help clients find fixer-uppers, design their home, and manage the renovation process from start to finish. Our proprietary approach gives buyers peace of mind by ensuring each property is properly assessed for condition and renovation potential—so the fixes align with your goals and stay within budget. We’re also pre-approved with multiple banks that offer renovation loans, allowing you to finance the home and renovation together with as little as 20% down.
How to Finance a Fixer-Upper Home?
Financing a fixer-upper home can be more complex than buying a move-in ready property, but there are several financing options available, each with its own advantages and drawbacks.
Construction-to Permanent Loan
A Construction-to-Permanent loan is a single-close mortgage that allows homebuyers to finance both the purchase of a property and the cost of major renovations or a new build in one streamlined loan. It’s ideal for buyers who want to customize their home and maintain long-term financing flexibility, often used for fixer-uppers or ground-up construction projects.
Pros:
One close for purchase, renovation, and mortgage
20% down on total project cost (including home & renovation)
Allows for luxury upgrades
Locked rate for long-term financing
Flexible scope for major renovations or new builds
Cons:
Requires a pre-approved builder (Buildable is pre-approved by many lenders)
Upfront plans and bids needed to close (This is part of Buildable’s process)
Funds disbursed in phases based on progress, which is for your protection
Fannie Mae HomeStyle Renovation Loan
The HomeStyle loan is a conventional renovation mortgage available to borrowers with stronger credit. It also allows you to combine purchase and renovation costs like a construction-to-permanent loan.
Pros:
Can be used for primary homes, second homes, and investment properties
Allows for luxury upgrades and a broader range of renovations
May offer lower mortgage insurance costs compared to FHA loans
Cons:
Requires higher credit score and better debt-to-income ratio
More complex application process
Requires detailed renovation plans and licensed contractors (Buildable is pre-approved by many lenders)
Home Equity Loan or HELOC
If you already own a home with equity, you can use a home equity loan (a lump sum) or a HELOC (a line of credit) to fund the purchase or renovation of a fixer-upper property.
Pros:
Lower interest rates compared to personal loans or credit cards
Access to substantial funds based on home equity
Flexible use of funds
Cons:
It’s a secondary loan, and not the primary loan for purchase
Only available if you already own a property with sufficient equity
HELOCs often have variable interest rates
Equity-Backed Loans
Equity-backed loans are financing options where borrowers use existing assets—like a stock portfolio, retirement account, or other investment holdings—as collateral. These loans are popular among high-net-worth individuals looking to access cash without selling their assets.
Pros:
Preserve investments (no need to sell assets)
Fast access to funds
Preserve investments (no need to sell assets)
Cons:
Higher interest rates
Borrowing limits based on portfolio value
Shorter repayment terms
How Much Financing is Needed for a Fixer-Upper Home?
The amount of financing needed for a fixer-upper can vary significantly depending on the purchase price of the home, the extent of the renovations, your desire for luxury amenities, and local costs for labor and materials. For Fixer-uppers that need mostly cosmetic updates and some foundational fixes—such as electrical or plumbing fixes, painting, new flooring, minor kitchen or bathroom updates, and basic landscaping—renovation costs in San Diego typically range from $25,000 to $100,000. Moderate fixer-uppers, which may require full kitchen or bathroom remodels, new roofing or windows, and upgrades to plumbing or electrical systems, usually fall in the $100,000 to $250,000 range. For major fixer-uppers that need structural repairs, luxury updates, complete gut renovations, system overhauls, or room additions, the renovation costs can exceed $250,000 depending on the scope.
Getting accurate contractor estimates early in the homebuying process is essential—especially when you’re relying on financing to cover both the purchase and the renovation. However, this is often easier said than done. Most general contractors are hesitant to invest significant time in reviewing a property you don’t yet own. And when they do provide estimates, they’re often rushed or based on limited information, which can lead to unexpected costs down the line.
That’s exactly why we created the Buildable process. We step in during the evaluation phase—before you’ve closed on the home—to provide a thorough inspection and realistic renovation estimate. Our team assesses the property’s condition, identifies necessary updates, and works with your budget and goals to ensure the numbers make sense. It’s the difference between guessing and planning—and it can save you thousands in costly surprises.
In addition to construction costs, buyers should also factor in expenses for permits, inspections, design plans, and a contingency budget—typically 10% to 20%—to cover unexpected issues that may arise during the renovation process. If the home is uninhabitable during repairs, temporary housing costs may also be necessary.
Can a Construction Loan Be Used for a Fixer-Upper?
Yes, you can get a construction loan for a fixer-upper, and in many cases, it’s the smartest way to finance a major renovation. Construction loans are typically used when a home needs substantial work—whether it’s a gut renovation, major structural updates, or making an unlivable property habitable again. They’re designed to cover both the purchase and the renovation costs, and they often make more sense than traditional financing when the scope of work goes well beyond cosmetic upgrades.
For example, if you’re buying a home for $1.2M and planning a $300K renovation, a construction-to-permanent loan allows you to roll both into a single mortgage with just 20% down on the combined cost. That means you only need $300K out of pocket instead of $540K—saving you significant upfront cash and simplifying the financing.
This is exactly where Buildable comes in. What makes our model so powerful—and rare—is that we’re not just builders or agents. We’re both. We’re one of the few general contractors pre-approved with major lenders to help you secure construction loans for fixer-uppers, and we guide you from home search to renovation, all under one roof. Most buyers have to piece this process together on their own, often without reliable renovation estimates or a trusted contractor until it’s too late.
With Buildable, we bring clarity, structure, and expertise to what’s traditionally been a fragmented and risky process. No one else offers this kind of start-to-finish support for renovation buyers in Southern California—and that’s why we built it.
How to Choose the Best Financing Option for a Fixer-Upper Home
When it comes to financing a fixer-upper, the smartest move you can make is partnering with experts from the start—and that’s where Buildable comes in. We don’t just help you find the right property; we evaluate each home alongside you, giving you real-world cost guidance and helping you understand which financing options best align with your goals. The type of financing you choose depends on the scope of work needed, your financial profile, and your vision for the home.
If the property only needs minor cosmetic upgrades—like paint, flooring, or light kitchen refreshes—you may be able to use simpler financing options like a personal loan, HELOC, or even cash. But if the home needs structural changes, a new roof, or a full-scale renovation, a construction-to-permanent loan is often the best and most cost-effective route. These loans allow you to roll both the purchase and renovation costs into one mortgage with as little as 20% down—significantly lowering your upfront investment.
With Buildable, you get access to a team that’s already pre-approved by top lenders for these types of loans, which dramatically speeds up the process and increases your confidence from day one. Most buyers struggle to get real numbers or find contractors willing to scope a project before they own the property—our model solves that. We work with you on everything from budgeting and planning to lender coordination and construction management, ensuring you don’t just get the loan—you get the right house, the right plan, and the right result.
Bottom line: choosing the best financing option isn’t just about what you qualify for—it’s about having the right team in your corner to make sure your purchase is a smart investment. And that’s exactly what Buildable was built for.
How Buildable is Your Partner in Home Remodels & Home Builds
At Buildable, we simplify the complex process of land development in California. Our team helps clients avoid costly mistakes and streamline the building and remodeling process. Our mission is to guide our clients smoothly through their projects, helping to avoid common pitfalls while saving both time and money. From the outset, Buildable takes the lead, leveraging our network of reliable partners to ensure your project is not only completed within budget but also meets your timeline. From helping plan a significant remodel to the final inspection, Buildable is your one-stop shop for custom home builds. To learn more about how we can assist you and to discuss your specific project needs, schedule a consultation with us here.
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