How do I finance a fixer-upper that needs major repairs?

FHA 203(k) and conventional HomeStyle Renovation loans roll purchase + repair costs into one mortgage. Hard money + refi is the alternative for tighter deals.

A fixer-upper that needs roof, electrical, or system replacement before it's habitable can't be financed with a standard mortgage - the lender won't fund a property below livability. Three paths exist. FHA 203(k) Renovation Loan: government-backed, 3.5% down, rolls purchase + rehab into one loan. Two flavors: Streamlined 203(k) for cosmetic work up to $35K, Standard 203(k) for structural / major repairs (any amount). The lender holds repair funds in escrow and disburses to contractors as work completes. Standard 203(k) requires HUD-approved consultant ($500-$800), licensed general contractor with detailed bid, and 6-month rehab timeline. Best for owner-occupied. Conventional HomeStyle Renovation: Fannie/Freddie product, same structure as 203(k) but conventional - 5% down on owner-occupied or 20% on investment, no HUD consultant required, slightly faster. Both 203(k) and HomeStyle accept the AS-IS purchase price plus repair budget, total can be up to 110% of after-repair value (ARV). Hard money + refi (the BRRRR path): buy with hard money (10-12% rate, fast close), rehab, refinance into a DSCR or conventional loan once stabilized. Used when the deal is too time-sensitive or the rehab too complex for 203(k).