Can I finance Home Improvements with a new mortgage?
Yes, you can Finance Home Improvements with a new mortgage. So, what type of transaction will allow a borrower to purchase or refinance a home, and include some home improvements to be financed in within the deal?
The 203K Streamline allows a customer to purchase or refinance a home and allows them to make limited upgrades or repairs to the property with just one single loan. So, let’s say a borrower wants to purchase a home but it’s in need of repairs. The 
borrower would contact a qualified contractor (who will need to be approved with the lender as well) and would obtain bids for the needed improvements. Those bids would be submitted to the lender, along with the purchase contract. The amount of funds that are needed for the repairs or improvements are held in an escrow account with the lender. This allowed the buyer to finance home improvements with a new mortgage. This program is intended for somewhat minor improvements or repairs. While there no minimum dollar amount requirements for the repairs being done, there is a maximum of $35,000 which includes a 10% contingency reserve.
Some examples of allowable improvements would be the repair or replacement of roofs, gutters, HVAC systems and electrical systems. This program also allows for minor remodeling such as kitchens, painting, carpeting, weatherization, etc. Installation of appliances is also allowed and even septic system and/or well repair or replacement is allowed.
Ineligible work would be MAJOR rehabilitation or major remodeling, such as relocating walls, new construction (no room additions are allowed), or any repair of “structural damages”..(So, if there is a bearing wall that 
required repair work, or foundation work required, those items would not be allowed under this program). In addition landscaping improvements and pool improvements are also not allowed.
Once the borrower receives approval from their lender to finance home improvements with a new mortgage, the borrower is required to start the needed repairs within 30 days after the loan closing, and they have three months to complete the repairs. Bear in mind, if you want to finance home improvements with a new mortgage you are required to occupy the property as your primary residence. This is for owner occupied transactions only, not investment property transactions.
The 203K Streamline loan program is a great option for folks looking to tackle a project and who want to finance home improvements with a new mortgage.
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