How to Buy a Fixer-Upper: Costs, Loans, and Tips

Key takeaways: A fixer-upper may cost less upfront, but renovations, inspections, and unexpected repairs can increase your total investment. Before buying, evaluate the home’s major systems, obtain contractor estimates, and set aside a 10% to 20% renovation contingency. Renovation loans can help eligible buyers finance a home and its improvements together, but requirements vary by program and lender. Fixer uppers have traditionally been a popular way for first-time home buyers to enter the housing market. They typically cost less upfront, giving buyers an opportunity to build equity through renovations and improvements. Since the pandemic, though, fixer uppers have declined in popularity due to skyrocketing home prices and construction costs making the math less likely to work out. But that’s not to say all fixer uppers are a bad investment. In many cases, they can offer a shot at the American Dream while helping buyers feel like they turned a house into a home. If you’re wondering how to buy a fixer-upper, the process starts with understanding the property’s condition, estimating repair costs, exploring financing options, and deciding whether the investment makes sense for your bu...