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Home improvement loans are used for either financing home improvements to an existing home owned by a homeowner, or for buying a new home that is in need of home improvement repairs to get it to a proper occupancy level. Getting a home improvement loan in today's economy and housing market conditions is tough; however it is not impossible if you have good credit.

Home Improvement Loans for Existing Home Ownership

When seeking a home improvement loan for the purposes of improving an existing home, such as building home additions, remodeling kitchens, bathrooms, and basements, and even for improving landscaping there are a number of alternatives for the homebuyer.

Home Improvement Loans for Buying Fixer-Up Homes

Getting a home improvement loan for buying an existing home, such as a fixer-up can be more difficult, however it is not impossible. For example, the U.S. Department of Housing and Urban Development (HUD) offers a loan program known as FHA 203(k) that allows a homebuyer to buy, or refinance a home and include in the proceeds of the home improvement loan the monies necessary for making the home improvement. The loan works similar to a home construction loan.

At the loan closing the home seller is provided with the funds for the purchase of the home by the homebuyer. The remaining home improvement loan funds are then put in escrow and used to pay for the home improvements during the renovation period. As the home improvements are made, funds from the escrow are released to the home improvement contractor, via draw requests, for work performed. However, the contractor is only paid 90% of the draw request to ensure that he completes all of the home improvement work.

So whether you are an existing homeowner looking for a home improvement loan to remodel a kitchen, or if you are a want-to-be homeowner who is looking at buying a fixer-up and needs home financing that includes a home improvement loan component to the financing package there is a solution for all.