How To Get The Best Renovation Loan For Your Houston Project

[BLOG] Published: 2021-06-21 - Updated: 2023-02-09

How To Get A Renovation Loan For Your Houston Project


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Expert Tips On How To Get A Renovation Loan For Your Houston Project

Are you wondering how to get a renovation loan for your upcoming project? We must have had you in mind. While many view the process of getting a renovation loan as tiresome,  we make it pretty straightforward in this article.


If you never knew you could get a loan for your renovation work or thought it would be hard to get a loan, this article explores the various loan requirements, types of renovation loans in Houston, and curated expert tips for a successful project.

What You Should Know Before Opting For A Renovation Loan

Home improvement projects are smart ways to breathe new life into your property and increase its return on investment (ROI). However, home remodeling can be extremely expensive, and unless you have some savings set aside for such projects, you may need financing. Remember that the best way to maximize your ROI is to spend as little as possible on your home improvement project.

As a rule of thumb, the best renovation loan is the one with the lowest rate. Therefore, when applying for a renovation loan, try to make everything fall within your budget and lifestyle to avoid creating a financial mess. 

Ultimately, when looking for ways to finance your home improvements, you should consider vital factors such as your credit score, home equity, and the amount of money you want to borrow. You can use a home renovation loan calculator to create reasonable expectations for your project.

Pro tip Takeaway: Apply for a renovation loan with the lowest rates to maximize your return on investment.

Which is the Best Home Renovation Loan for You?

There are several types of home improvement loans, and the one you choose depends on your lifestyle and finances. We've highlighted some of the most common loan types that you can compare to choose the most suitable for you.

  1. FHA 203 (K) Loan

FHA 203 (L) loans are among the most popular and affordable loans in the United States. And this is because they have the most favoring qualification requirements and are government-backed. An FHA 203 (k) loan lets you refinance or buy a primary home and transfer the overall costs to your mortgage, allowing you to pay for your home improvements over time.

Since these loans are government-insured, they offer several perks, such as a lenient qualification process, a slightly lower down payment, and a low credit score. To qualify for this type of loan, you should be prepared:

  • To provide your SSN and the required documents to verify your credit, monthly income, and debts.
  • Have a credit score of 500 or higher.
  • For a credit score of above 580, you will pay a 3.5% down payment, but if your credit is 579 down to 500, you will pay a 10% down payment.


  1. Home Equity Loans

A renovation home equity loan lets you borrow money based on your home's value. If you have an existing mortgage, you'll have to pay your equity home separately because it doesn't offset the current mortgage. If you've built up significant home equity or you want to finance a large, one-time project, applying for a home equity loan could be a good idea. To qualify for this loan, you must have;

  • At least 620 credit score
  • A good history of debt and bill payments
  • Your home's equity should be at least 15 – 20 percent of its total value
  • Have about 43% to 50% debt-to-income ratio


  1. Personal Loan

Another way to finance your home renovation is through a personal loan. The good thing about using an unsecured home improvement loan is that you don't need collateral for the loan. This also makes them the fastest loans to acquire. While a personal loan has higher interest rates, they have flexible rates (fixed & adjustable) and payment terms, ranging from 2 – 5 years. To qualify for an unsecured personal loan, you need;

  • To send a formal loan application to your lender.
  • Have a good credit score history – at least 600 to qualify
  • Proof of identity – you should be above 18 years and a US citizen.
  • Provide income/employer verification
  • Provide proof of your home, including your address, voter registration card, current utility bill, copy of the rental agreement, and more

Pro-tip Takeaway: Home renovation loans can help complete your work without much struggle. But ensure you apply for a loan that suits your finances, lifestyle, and current situation.


How to Minimize Costs when Renovating

  • Choose a Suitable Loan for You

Before you apply for any home improvement loan, ensure you shop around to understand each loan's requirements. You don't want to take a loan that will take you a lifetime to repay, or worse, a loan that you're likely to default. Should you combine your savings with your renovation loan or refinance your mortgage, or you'll rather cash it out? Compare the available financing options and select the most suitable for you.

  • Hire Qualified Professions

Without an appropriate plan, your remodeling budget can quickly build up and get out of control. That's why it helps to work with professionals. At Smart Remodeling, we go out of our way to create a plan that suits your situation and ensure we follow that plan throughout the remodeling process to deliver the desired results. Furthermore, we will help you avoid unexpected disasters and make sure the project runs smoothly from start to finish without a budget blowout.

Pro-tip Takeaway: Take time to choose a home renovation loan that's most suitable for you. Above all, partner with a reputable contractor for guidance to ensure you achieve your dream home efficiently and affordably.

Get Expert Advice

At Smart Remodeling LLC, we offer free expert advice and free cost estimates to help figure out what your project is likely to cost.

Schedule a free consultation today and get started with your project.

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