How You Can Remodel Your Home With Low- or No-Interest Financing

If you want to remodel your home, you need to have the funds to do so. For most people, that means taking out a loan in addition to their mortgage – one that comes with an equally high interest rate. But for many homeowners, finding affordable financing can be a challenge. You can search online to find low-interest loans for home remodeling projects.

However, there is another option. You may be able to take advantage of subsidized funding programs or loans available through your local government. And these loans, which are meant to be used specifically for home renovations, come with low interest rates. Some even come with no interest at all. Search online to find low- or no-interest home remodel loans in your area.

Here’s how you might be able to finance your home remodel with subsidized funding or low- to no-interest government loans.

Low- or No-Interest Financing Options Are Different From State to State

Low- or no-interest loans are pretty widely available. However, few homeowners know they exist. Even fewer realize that the county you live in could grant you one of these helpful, low-cost loans. 

These unique loans and funding programs are offered by government agencies within your local county. Some counties offer the loans through specific lenders; some counties offer the loans themselves. It all varies from state to state and county to county.

To find these programs and loans, you’ll want to search for a Home Improvement Program (HIP) in your area. They might also go by home repair assistance, home improvement programs, or other similar names. 

The following are just a few examples of the types of HIP loans offered by different counties in various states:

Counties offer these programs specifically for their residents. While they’re often designed for low-income families, each county will have its own requirements for applicants. Check online to see what might be available for you in your home county.

You Could Save a Lot of Money

By applying for one of these low- or no-interest financing programs, you could save significantly. While these loans won’t save you any money on the cost of your home remodel or repairs, you will save over the long run.

Unlike other sources of financing for home renovations – like personal loans or home equity loans – HIP programs typically offer lows with much lower interest rates. The county government will subsidize a portion of your loan’s interest rate, which lowers the interest rate you actually pay.

For example, say a HIP loan offers an interest rate of 4.5 percent and your county subsidizes 3.5 percent of the loan’s interest rate. That means you’ll save 3.5 percent on the amount of interest you’re responsible for, paying just 1 percent in interest. Over the course of repaying a five-year loan totaling $20,000, you’ll save $1,859 in interest in total. It brings down the total interest cost from $2,371 with full interest to just $512 with subsidized interest. 

You could keep more money in your bank account if you’re able to get a lower interest rate. And some local county governments will even offer 0 percent interest rates for special projects, like increased energy efficiency.

Each Financing Program Offers Loans of Different Amounts

Just like the available loans differ from county to county, the amount you’re able to borrow with a HIP loan also varies. Different counties will set different limits for local borrowers.

However, you can typically borrow around $25,000 with a HIP loan. Some county programs like the Fix Up Loan Program offered in Minnesota, will allow you to borrow as much as $50,000. Check with your local county to find out what your options are.

You Do Have to Qualify and Meet Requirements

Keep in mind that there are special requirements that you must meet in order to take advantage of HIP loans. These unique county government programs are most commonly designed to help low-income individuals renovate or repair their homes. This means you may need to meet certain income requirements as well as other qualifying standards.

Typically, you’ll need to meet the following qualifications to receive one of these low- or no-interest loans:

  • An annual gross income that falls below a certain threshold.
  • A home value below a certain limit.
  • Proof that all county taxes are paid and up to date.

You may also have to have a program administrator or government official oversee and monitor your renovations. You might also have to meet certain stipulations, like completing the project within a certain time period or allocating the funds in a certain way.

How You Can Use Your Loan

Once you’ve been granted a HIP loan, you’ll likely be restricted in how it can be used. HIP loans typically come with requirements and rules about how the money can be used and what projects it’s allowed to cover.

For example, some counties might allow you to purchase appliances with the funds. Others might not. Some loans must be used solely to correct building code violations or damages. Typically, you won’t be able to use the loan to fund “luxury” projects – which includes swimming pools, hot tubs, decks, and other non-essential home items.

You can, however, use the funds to remodel critical areas of your home. You’ll likely be allowed to put the money to use remodeling bathrooms and kitchens, update windows and doors, replace roofing or siding, and even make accessibility changes.

Make sure to check the fine print of the HIP loan you’re considering to ensure it’ll suit the work you want to do.

Search for Low- or No-Interest Financing in Your Area

If you’re looking for an alternative source of financing and funding for your home remodel, consider a HIP loan. Available under many different names and in many different forms, your local county government might offer a low- or no-interest loan that makes your remodel more affordable. 

You can search online to discover what options for HIP funding are available in your area. Look for government loans and financing options that may offer reduced interest rates. It could help you save significantly over the course of your loan. And it’ll provide you with the critical funding you need to tackle the renovations you’ve been waiting for.

Sergey Nivens / Shutterstock

Heather Fishel

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