Secure Funding For Your Remodel Or New Construction

Professional Advice

Whether it be building a porch or deck, or remodeling a kitchen or bathroom, construction projects in the Research Triangle region can cost a pretty penny. Fortunately, there are a number of financing options available to homeowners—a mortgage broker alone has as many as 100 loan programs that homeowners in the Triangle can choose from. Having said that, finding the ideal financing option can be just as tricky as finding the perfect home. So in this blog, the team at Glasgow Design Build will take you through two of the most popular loan options you can consider, in order to fund your home renovations in Raleigh, NC.

Let’s start…

1. Home Equity Loans

Home equity loan or home equity line of credit (HELOC) is perhaps the first choice for homeowners in Raleigh, NC. This is due to homeowners’ desire to draw on home equity, which is arguably the most significant benefit of homeownership today. You can build your home equity over time and use it to secure low-cost funds. These low-cost funds are secured in the form of a second mortgage, which is just a subordinate mortgage obtained while the first mortgage is still in effect.


You can calculate your home equity by subtracting the current value of your home from your mortgage balance. Under home equity loans, the equity in the home serves as collateral. Like your primary mortgage, these loans are secured by your home, which is why the interest rates on them are incredibly low.

How does a home equity loan work?

The answer is pretty straightforward: Borrowers are offered a large lump sum payment, which they are expected to repay in fixed installments for a set period of time. Before the lender can lend you money to finance your Raleigh, NC, home renovations, you must first establish your budget. However, it is worth noting that you may qualify for more money than you require. Also, since home equity loans are fixed-rate loans, the interest rates remain constant over the term of the loan.


Your lender will consider three key variables (namely equity, debt-to-income ratio, and credit score) to determine your eligibility for the home equity loan. They will calculate your home equity after appraising your home—lenders generally lend up to 80% of the home’s equity. The lender will also look at your debt-to-income ratio, which compares your monthly financial obligations (debt) to your monthly earnings (income). Finally, before lending you money, the lender will run a credit check on you to ensure that you will not default on your loan. According to the multinational consumer credit reporting company Experian, if your credit score is 680 or higher, you have a pretty good chance of qualifying for a home equity loan.

Home equity loans are easier to qualify for, have fixed interest rates, and have longer repayment terms. However, the single most important thing about these loan options is that there are no limits on how you can use them. This means that you can tap into your home equity and use it to hire the best general contractor in Wake County, NC.

Related Read: Ways To Increase Your Home Value This Year

2. FHA 203(k) Loans

Typically, the amount received by a borrower includes the purchase price of the home or the cost of renovation, as well as the cost of materials and hired labor. If necessary, FHA loans may also be used to finance temporary housing. This may be in the form of rent for the period that the house is being renovated or constructed.

Types of 203(k) Loans

FHA 203(k) loans are classified into two types: standard 203(k) and limited 203(k) (k). The former is for borrowers who need extensive remodeling or structural repairs, while the latter can be used by the Triangle homeowners to make minor repairs or purchase new household appliances.

Standard 203(k)

As previously stated, if you want a general contractor in Wake County, NC, who can do substantial repairs and structural work, this loan option is exactly what you need. Standard 203(k) loans can be used to buy or refinance a home, and you can roll up to 6 months of payments into the loan. These loans can be up to 110% of the appraised value of your home after it has been renovated. The lenders can provide you with a minimum of $5,000, and there is no set maximum amount. Standard FHA loans can cover repairs such as plumbing, flooring, HVAC installation, landscape improvements, and bathroom and kitchen upgrades.

Limited 203(k)

This loan is perfect for home renovations in Raleigh, NC, that do not entail a lot of substantial repairs and structural work. Limited 203(k) loans do not cover major repairs—such as extending the living areas or landscaping—and the house must be habitable during the renovation period. Furthermore, to tap into the cash to fund your home improvement, your overall budget should not exceed $35,000. That being the case, this loan option can be helpful for cosmetic repairs and minor upgrades, including bathroom or kitchen cosmetic remodeling, new flooring or carpet installation, and plumbing repairs. Similar to the standard 203(k), limited 203(k) can be used to buy or refinance a home, and the loan can be up to 110% of the appraised value of your home after it has been renovated.

If you think that an FHA 203(k) loan is the perfect choice for you, we have a mortgage financing firm that can help you further: First Heritage Mortgage. Glasgow Design Build has a licensed official in North Carolina, who can be your go-to person for any type of loan-related guidance.

Once you have your funding sorted, you can come to us. Glasgow Design Build is a licensed general contracting firm in Raleigh, NC, that can help you remodel your house and create a new, exciting living space. Call us today at 919-244-2979 or contact us online to learn more about our services.