How to Find Financial Assistance for Major Home Improvement Projects

You can undertake various home improvement projects to enhance your home’s curb appeal, increase comfort, and maximize energy efficiency. But while home improvement projects can be exciting, they often come with a hefty price tag. Fortunately, you can explore numerous home improvement financing options to help you fund your projects. So, whether you’re considering a kitchen remodel or a roofing repair, this post explores various options to finance your projects.

Utilize Government Grant Programs

If you’re thinking of making a necessary improvement to your home or property, you might benefit from government grants to help you fund your project. Dozens of government-sponsored home improvement grants offer money to homeowners making specific property updates.

Federal, state, or local governments often issue these grants. But not everyone or every home improvement project benefits from these grants. However, if you qualify, they can be an excellent source for your home improvement financing. Check your eligibility for the grants and take advantage of this opportunity if you qualify.

Types of Home Improvement Grants

If you’re planning to give your home a facelift but don’t have money to fund the project, you can contact your local Housing and Urban Development (HUD) office to know the grants in your area. You can also find grants to fund your home improvement projects through the National Residential Improvement Association (NRIA).

So which home improvement grants are available? Whether your home needs foundation repair services or roofing services, you may benefit from the following grants as long as you qualify.

The HOME Investment Partnerships Program

The HOME investment partnerships program offers home improvement financing for low or very low-income Americans. The primary goal of this program is to create affordable housing, particularly for low-income families. On average, the HOME investment partnership program offers around $2 billion yearly to fund home improvement projects. HOME grants cover renovations, like roof installation, that protect your home against weather or emergency repairs.

Section 504 Home Repair Program

This program offers loans to very low-income homeowners looking to repair, improve, or modernize their homes. Also, if you’re elderly and in the low-income bracket, the program might offer you grants for home improvements that eliminate health and safety hazards. This could include the cost of hiring roofing companies to repair or replace roofs.

To qualify for the Section 504 Repair Program, you must be the homeowner and occupy the house that needs improvement. Also, you should be unable to obtain affordable credit elsewhere. For grants, you must be 62 years or older.

Native American Housing Improvement Program

This program gives you up to $60,000 for repairs, renovations, replacements, or new housing. However, you must be a member of the American Indian tribe or an Alaska Native to qualify for the Housing Improvement Program. Additionally, you may qualify if your current housing is substandard and you have no other resources for housing assistance.

VA Specially Adapted Housing Grant

If you’re a veteran or service member with specific service-connected disabilities, you may be eligible for this grant. The grant offers home improvement financing to help you buy or improve your home to meet your needs and live more independently.

Some home improvements this grant covers include widening your doorways or installing ramps. To qualify, you must be the homeowner of the property to be renovated or bought and have a qualifying service-connected disability. This includes blindness in both eyes, certain severe burns, and the loss of more than one limb. If you meet all the requirements for the special home adaptation grant, you may get up to $109,986 to help you fund your home improvement projects.

Other Types of Financial Assistance Available

Not everyone qualifies for government-sponsored grants. But this shouldn’t stop you from hiring a roofer to repair or replace your roof. If you’re considering a major home improvement, you have other financing options to consider. They include;

Affordable Home Improvement Loans

If you don’t have enough money to complete a major home improvement project, you can consider taking a home improvement loan to help you fund the project. But before you take a home improvement loan, you must estimate project costs. This will vary depending on the type of home improvement and your location. For instance, a tree removal service may cost more than a closet renovation.

If you apply for a home improvement loan, the lender will give you a lump sum. Once the money is disbursed, you can use it to complete your home improvement projects, such as hiring water damage cleanup services. However, you’ll be required to make fixed monthly payments as soon as the funds are disbursed.

Your home improvement loan rate will vary based on your credit score, loan amount, and repayment term. You’ll likely enjoy low rates if you have a higher credit score. Since various lenders offer home improvement loans, the requirements for qualification vary. But there are general qualifications you’ll need to meet.

For instance, you must have a sufficient and consistent income. No one will loan you money if you don’t have a job or don’t have any source of income. Additionally, you must have a good or excellent credit score, typically around 670 at minimum. Some lenders only lend to citizens of specific countries.

Some lenders will let you use a co-signer if you don’t meet all the loan qualifications. Others will demand collateral almost equivalent to the loan amount. But generally, home improvement loans don’t require you to use your house as collateral. As a result, if you’re unable to pay the loan due to some unavoidable reasons, you won’t lose your house. The only downside of home improvement loans is that they have very high-interest rates.

Home Equity Line of Credit (HELOC)

A HELOC loan is a secured loan for significant home improvements. You might be eligible for a home equity loan or HELOC if you have equity in your home. This means the lender uses your home as collateral for the loan. If you fail to repay the loan as agreed, the lender may repossess your house.

You’ll need equity in your home to qualify for a HELOC loan. This means the amount you owe on your home should be less than your home’s value. Before qualifying for a HELOC, the lender may also consider other factors like your credit score, monthly debts, and employment history.

The maximum amount you can get from a HELOC varies based on your home’s value and how much you owe on your mortgage. The rates will also vary based on the lender. Basically, a HELOC is an ideal financing option if you need access to funds at different times. Also, HELOCs offer flexible repayment options of up to 30 years, depending on how much you borrow.

Home Equity Loan

The home equity loan or a second mortgage is another alternative home improvement financing to help you fund major home improvement projects. Home equity loans offer higher borrowing limits and repayment periods than home improvement loans. The loans are also secured—you must put your home as collateral.

If you meet all the requirements for a home equity loan, your lender will pay out a single lump sum. You can start repaying your loan immediately. Home equity loans are ideal for significant, immediate expenses like water heater replacement.

Cash-Out Refinancing

You can replace your existing mortgage with a new, larger mortgage with a cash-out refinance. This allows you to withdraw the difference between the two mortgages and use the money for your home improvement projects.

However, a cash-out refinance may only be ideal for specific home improvement projects, like water heater installation. This is because the cash amount is based on your home’s equity value. Additionally, you’ll need to meet certain requirements to qualify for cash-out refinance.

For instance, you need a good credit score, typically 620 or more. Additionally, most lenders set a debt-to-income ratio limit of around 43% on your new loan. You must also maintain a minimum of 20% equity in your home to acquire this home improvement financing. It’s worth noting that a cash-out refinance is a secured loan. This means your home will be used as collateral. Therefore, you risk losing your home if you fail to repay your loan as agreed.

Check With Local Community Development Programs

You might get home improvement financing from a local community development program in your area. These programs offer financial assistance for major home improvement projects to promote community development and housing rehabilitation.

Local community development programs may offer low-interest loans or grants for various projects, including roofing. Also, if you hire a home repair company to modify your home and improve its value, these programs might cater to all the costs.

However, local community development programs are limited to specific communities/regions. Therefore, you should check with your local housing authority or community development agency to learn about these programs. This also helps you determine your eligibility for this home improvement financing.

Tips to Help You Finance Your Major Home Improvement Projects

While embarking on a significant home improvement project can be exciting, the financial aspect can be challenging. Fortunately, there are multiple home improvement financing options to help you fund your projects. But all the options discussed above have benefits and drawbacks. Therefore, it’s essential to assess each financing option using it to finance your home renovations. Here are some tips to keep in mind for your home improvement financing.

Save and Plan Ahead

If you own a house, you already know that you’ll need to make some upgrades in the future. Therefore, planning ahead and saving early for your home improvement projects is crucial. It is the safest financial option to pay for your home remodeling or renovation project without worrying about paying back loans.

However, saving money can take longer and ultimately delay your home improvement projects. So, if you don’t have time to save or need an emergency repair, you might want to consider other financing options.

Set a Budget

If you go for external financing, you’ll need to know the costs of your home improvement projects. Therefore, it’s crucial to have a realistic budget considering the type of home improvement needed, the materials, labor costs, and other additional expenses. A budget helps you understand the amount needed to finance your projects and also guides your decision-making process.

Research Home Improvement Financing Options

You can always have funds to fund your home improvement projects because there are multiple financing options. However, you shouldn’t go with the first option you find and ignore the rest. Instead, explore all the available options, including home equity loans, personal loans, and government programs to find the ideal financing option. Compare interest rates, terms, eligibility criteria, and repayment options to find the best fit for your needs.

Utilize Your Home Improvement Loans/Funds Well

Just because you got a HELOC loan doesn’t mean you should spend all of it on your home improvement project. This is why you need a plan and a budget before applying for the loan. Once you have the money, stick to your budget and minimize spending.Sometimes, good use of money means being frugal until you attain your objectives.

Don’t hesitate to negotiate prices and seek competitive quotes from suppliers, contractors, and other home improvement service providers. Sometimes, you might save money by doing certain parts of your projects yourself. However, ensure you have the knowledge, skills, and equipment to DIY any project. If not, it’s best to leave everything to the professionals. The goal is to save as much money on your home improvement projects. Once your home improvement projects are complete, you can use the balance to repay your loan.

Home improvement projects can transform your home, making it more comfortable, functional, and visually appealing. However, financing major home improvement projects is often challenging for many homeowners. Fortunately, various home improvement financing options exist, including government-sponsored grants, personal loans, home improvement loans, and more. You can try any of the options to fund your home improvement projects.