Loans, Grants, and Charities That Help With Home Repairs

UPDATED: SEPTEMBER 15, 2023 | 3 MIN READ

Owning a home is a milestone for many people. However, unexpected costs from renovations, repairs, and maintenance can quickly accumulate, and home insurance only covers damages caused by specific events. So small repairs can quickly drain your bank account.

Think about it. The average cost of a new roof is around $10,000. And that’s just the average cost – it varies depending on the roof, material type, and location. 

And that’s just one type of home repair owners need to worry about.

Fortunately, there are charities, grants, and loans homeowners can get to help offset the cost of home repairs. 

Loans for home repairs

There are several loans available to help you with home renovation projects, even if your credit is less than stellar. 

HUD Title 1 property improvement loan

The U.S. Department of Housing and Urban Development (HUD) provides property improvement loans. The Title 1 property improvement loan, specifically, offers up to $25,000 for single homes and $60,000 for multifamily homes. Loans can fund a range of renovations, from accessibility features to luxury amenities.

Securing a HUD Title 1 Property Improvement Loan entails meeting certain requirements. The HUD’s primary concern is ensuring that the loan will be repaid, and hence, the qualifications are mainly centered around the applicant’s financial credibility, the property’s value, and the purpose of the improvements.

Credit score and history:

While HUD doesn’t stipulate a minimum credit score, lenders typically look for scores of 620 or above. Applicants should have a reasonably clear credit history, meaning minimal late payments, bankruptcies, or other red flags.

Loan security:

• Loans under $7,500 are typically unsecured, meaning they don’t require collateral
• Loans above $7,500 must be secured by a mortgage or deed of trust on the property

Eligibility of property:

• The home must be the borrower’s primary residence. It excludes commercial properties and vacation homes.
• The property should be habitable. The loan isn’t for constructing homes but for improvements on existing structures.

Project qualifications:

The improvements should either make the home more livable and useful or extend its life. This covers a wide range, from accessibility features, such as ramps, to luxuries like a new patio or swimming pool.

Basic repairs, modernizations, and even adaptations for the disabled fall under this category.

Keep in mind luxury items, like a swimming pool or an outdoor fireplace, might be considered only if they add sufficient value to the property.

Proof of ability to repay:

To qualify, you must demonstrate the ability to repay the loan. This means you have to have stable employment, sufficient income, and a good debt-to-income ratio.

In some cases, lenders might request recent pay stubs, employment verification, or tax returns to validate this.

Loan amount and terms:

The maximum loan amount for a single-family home is $25,000, while multifamily homes can get up to $60,000.

The maximum loan term is 20 years for a single-family home and 20 years for a multifamily property, with the term for multifamily properties possibly increasing if the loan is used for fire safety equipment or structural improvements.

VA Rehab and Renovation loan

Exclusively for veterans, this loan aids home repairs to improve livability. It’s sometimes challenging to secure, but it’s worth exploring for eligible veterans.

Qualifications for the VA Rehab and Renovation loan

The VA Rehab and Renovation Loan is a specialized mortgage product from the U.S. Department of Veterans Affairs. It’s crafted to assist veterans and active-duty servicemembers in financing both the purchase of a home and the costs associated with its rehabilitation or renovation. While the loan comes with numerous benefits, it’s essential to know the qualifications. Here are some details:

• Veteran status: The primary eligibility factor is the applicant’s veteran or active-duty status. Eligibility is generally determined based on the length and type of service. Those who served in the National Guard or Reserves may also qualify, but their service requirements might differ from those in regular military service.
• Certificate of Eligibility (COE): Before applying for the loan, potential borrowers need to obtain a COE. This document verifies to lenders that the applicant meets the VA’s initial eligibility standards.
• Credit score: Though the VA doesn’t set a strict minimum credit score, many lenders prefer a score of 620 or higher. Credit requirements might vary among lenders.
• Debt-to-income ratio (DTI): While the VA doesn’t impose a maximum DTI ratio, a benchmark of 41% is often cited. Lenders might, however, have their own DTI requirements, and some might approve higher ratios if there are other compensating factors.
• Nature of renovations: The repairs or renovations should be significant enough to improve the home’s livability. Cosmetic changes might not be sufficient on their own, but they can be part of a larger rehab project.
• Loan limits: The VA doesn’t set a strict cap on the loan amount, but there are limits to the guaranty. This means that borrowers might be limited in terms of how much they can borrow without a down payment.
• Occupancy: The home being renovated must be the primary residence of the veteran or service member. Investment properties or second homes aren’t eligible.
• Professional appraisal: Before securing the loan, a professional appraisal of the home is required. This assessment ensures the planned renovations increase the home’s value.
• Contractor requirements: In most cases, the renovations or repairs must be performed by a licensed and insured contractor. Some programs might allow “do-it-yourself” work, but this often comes with additional stipulations and limitations.
• Additional documentation: As with any loan, applicants will need to provide financial documentation, including recent tax returns, pay stubs, and other relevant financial statements.

203(k) Rehabilitation Mortgage Insurance program

Often termed a rehab loan, the 203(k) helps those on tight budgets. It can complement the Title 1 loan to fund aesthetic or energy-efficient upgrades.

The 203(k) Rehabilitation Mortgage Insurance Program is a specialized mortgage product that combines the purchase (or refinancing) of a home with the costs of its rehabilitation or only the rehab of an existing home. 

Given the unique nature of the loan, the qualifications for the 203(k) are slightly different from other mortgage types. Here’s a breakdown of what potential borrowers need to know:

Eligibility of borrower:

A minimum credit score is often required, typically 620 or higher, though this can vary based on the lender. You also need stable employment and a verifiable income source. Keep in mind lenders might ask for recent pay stubs, W-2s, or tax returns to ensure consistent earnings.

Down payment and equity:

As with many FHA loans, the required down payment can be as low as 3.5% of the home’s purchase price or the appraised value, whichever is lower.

Refinancers should have sufficient equity in the property. Typically, lenders like to see that the loan-to-value ratio post-improvement isn’t more than 110% of the expected appraised value.

Eligibility of property:

The property must be at least one year old. But it can have up to four units. Condos are also eligible, but they do have specific requirements.

Also, the property should be used as the primary residence of the borrower. Investment properties and vacation homes are generally not allowed.

Scope of work:

Projects paid for by the loan can range from minor to major structural modifications. Ideally, the work should cost at least $5,000. This includes room additions, energy conservation measures, and safety improvements.

Funds can also be used for aesthetic purposes, like new flooring, updated fixtures, or energy-efficient upgrades.

Loan limits:

The amount borrowers can get, including both the purchase and rehab costs, depends on the property type and location. The FHA sets limits based on county median home prices.

As a rule of thumb, you can typically borrow up to 110% of the property’s anticipated post-renovation value.

Contractor requirements:

In most cases, borrowers must use licensed and bonded contractors for the rehabilitation work.

The contractor should provide a detailed written estimate. Some lenders might also require contractors to be approved or go through a vetting process.

Self-sufficiency:

If the property is deemed uninhabitable during renovations, the 203(k) can include an additional six months of mortgage payments to help homeowners during this period.

However, this provision means that borrowers should have a contingency plan or temporary housing in place.

Section 504 Home Repair program

Targeted at very low-income homeowners, this program offers loans up to $20,000 at a fixed 1% interest rate. Additionally, people above age 62 can access grants for health or safety hazards, potentially combining the grants and loan for $27,500 in total assistance.

The Section 504 Home Repair Program is a critical initiative by the U.S. Department of Agriculture (USDA) to assist very low-income homeowners in rural areas. Its focus is on making homes safer, more sanitary, and removing health hazards. 

To qualify for this program, there’s specific criteria that homeowners need to meet:

Income thresholds:

Applicants must be considered very low income, with their income typically being below 50% of the area median income. The USDA sets income limits based on household size and county, and these figures are updated annually.

Primary residence requirement:

The home in question must be the applicant’s primary residence. You can’t use the program for rental properties, secondary homes, or commercial structures.

Ownership and ability to repay:

The homeowner must either own the property or have a long-term lease. Loan applicants need to demonstrate the ability to repay the loan, which will be assessed based on their credit history, monthly expenses, and income.

Age requirement for grants:

The grant option, which doesn’t need to be repaid, is exclusively for homeowners who are 62 years or older.

To qualify for the grant, the homeowner must not have the means to repay the repair loan.

Use of funds:

Loan and grant funds should be exclusively used for repairs, improvements, or modernizations that make the dwelling safer or remove health hazards. This might include structural repairs, energy-saving projects, or improvements in water and sewage systems.

Loan terms:

The maximum loan amount is $20,000, with a term of up to 20 years. As mentioned, the interest rate is fixed at 1%.

Combining loan and grant:

If eligible, homeowners can combine the loan and grant for a total of up to $27,500.

However, the combined amount can’t exceed the home’s post-improvement value.

Location:

To be eligible, the property should be located in an area defined as rural by the USDA. The definition of “rural” can be surprisingly broad, encompassing many small towns and outskirts of bigger cities.

Citizenship or residency:

Applicants need to be U.S. citizens, non-citizen nationals, or qualified aliens to qualify for this loan and grant program.

Charities and grants for home repairs

For those ineligible for loans, charities can offer assistance. Organizations such as Habitat for Humanity, Rebuilding Together, The Home Depot Foundation, Operation Homefront, Volunteers of America, and Area Agencies on Aging provide varied home renovation support.

Community Development Block Grant program (CDBG)

Originating from the 1974 Housing and Community Development Act, CDBG grants aid states, cities, and counties. Funding spans from housing rehabilitation to infrastructure projects.

The Community Development Block Grant Program (CDBG) is a federal initiative designed to ensure decent housing, provide services to the most vulnerable in communities, and create jobs through the expansion and retention of businesses. 

Administered by the U.S. Department of Housing and Urban Development (HUD), the CDBG offers funding to local government agencies and certain non-profit organizations to carry out local community development projects. Here are the primary qualifications and criteria:

Primary objective:

• At least 70% of CDBG funds must be used for activities that benefit low- and moderate-income people.
• Such activities might include housing rehabilitation for low-income households or providing job training for unemployed residents.

Eligible grantees:

Only state and local government units (like cities and counties) can apply directly to HUD for CDBG funds. Non-profit organizations can’t apply directly but can partner with a local government agency to access funds. 

People looking for help with a project should contact their local Job and Family Services office for information on how to apply. Keep in mind that some cities and counties reserve these funds for people who live in low-income communities.

Target areas:

While funds can be used across a jurisdiction, many communities choose to target specific areas for development, often based on income data or the presence of slums and blight.

Public participation:

Localities must ensure adequate public participation in deciding how CDBG funds are used.

This often involves public hearings and consultation processes.

Eligible activities:

Funds can be used for a broad range of activities, including housing rehabilitation, public facility improvements (like water or sewer facilities), construction or rehabilitation of community centers, and infrastructure projects.

However, all activities must meet one of the program’s three national objectives: benefiting low- and moderate-income persons, aiding in the prevention or elimination of slums or blight, or addressing a severe and immediate threat to community health or safety.

Low Income Home Energy Assistance Program (LIHEAP)

This program assists families with energy-related costs. As provisions vary by state, checking local eligibility is essential.

Qualifications for LIHEAP

LIHEAP is a federally funded program designed to assist low-income households in meeting their immediate home energy needs. Administered by the U.S. Department of Health and Human Services (HHS), it provides financial assistance to eligible households to cope with energy expenses. Here’s a look at the qualifications and other pertinent details:

• Income levels: Eligibility is primarily based on household income relative to federal poverty guidelines. While specifics vary by state, typically, households with incomes up to 150% of the federal poverty level (or 60% of the state’s median income) might qualify.
• Residential status: Applicants must be U.S. citizens or permanent residents. They must also be responsible for paying their home energy bills.
• Energy emergency: Priority is often given to households facing an energy-related emergency, such as an imminent utility shutoff or a heating crisis in cold weather.
• Vulnerable populations: Households with older family members, persons with disabilities, or families with children under five often receive special consideration due to their increased vulnerability to extreme temperatures.

Types of Assistance 

LIHEAP offers several types of assistance, including help with heating or cooling bills, energy crisis assistance, and minor home repairs or replacements to ensure energy efficiency.

Proof of Expenses

Applicants must generally provide recent copies of their utility bills or proof of recent energy expenses.

Re-application 

Assistance isn’t automatically renewed. Households must reapply annually or as stipulated by their state’s guidelines.

Fund limitations 

Because LIHEAP funding is limited, not all eligible applicants might receive assistance. States often prioritize applications based on the severity of the energy need and the vulnerability of the household.

Additional state-specific requirements

As provisions vary by state, some states may have additional eligibility criteria or offer unique assistance programs under the LIHEAP umbrella. So it’s important for applicants to check with their local LIHEAP office or agency to understand specific state guidelines and requirements.

Weatherization Assistance Program (WAP)

Managed by the Department of Energy, WAP helps low-income families enhance home energy efficiency. Each year, it enables around 35,000 homes to save an average of $283.

Qualifications for the Weatherization Assistance Program (WAP)

WAP has been a cornerstone initiative of the U.S. Department of Energy for decades. The program seeks to improve the energy efficiency of homes belonging to low-income families, thereby reducing their energy bills and enhancing their overall quality of life. Here’s an overview of the qualifications and some salient features of the program:

• Income levels: The primary criteria for eligibility centers on the household’s income. Families earning up to 200% of the federal poverty level typically qualify for WAP services. Some states might have different income thresholds, so checking local guidelines is crucial.
• Automatic eligibility: Families receiving Supplemental Security Income (SSI) or Aid to Families with Dependent Children (AFDC) might be automatically eligible in certain states.
• Priority populations: WAP often prioritizes households with older family members, persons with disabilities, families with children, and those with high energy consumption.
• Ownership and residence: Both homeowners and renters can qualify for WAP. However, renters will need their landlord’s permission to undergo weatherization improvements. The applicant must primarily reside in the property being considered for weatherization.

Type of assistance

WAP includes services like insulation, air sealing, and repairing or replacing inefficient heating and cooling systems. Energy-saving measures are tailored to the specific needs of each home.

The program aims to offer the most cost-effective solutions to maximize energy savings.

Documentation requirements

Applicants must typically provide proof of income, such as recent tax returns or pay stubs.

Proof of home ownership, a rental agreement, and recent energy bills may also be necessary.

Reapplication

Homes that have previously benefited from WAP typically can’t be revisited for a set number of years, usually about 10-15, depending on the state.

Local providers

While WAP is a federal program, its administration happens at the state and local levels. As such, local agencies are the primary point of contact for services, and their specific requirements might vary.

Additional benefits

Apart from energy savings, WAP also has a positive impact on health and safety. By addressing issues like carbon monoxide dangers or mold, the program ensures homes aren’t just energy-efficient but also safe.

Insurance policies

Standard homeowner insurance might cover specific damages. Potential claims include unexpected flooding, wind damage, or fallen tree limb damage. However, this depends on the type of coverage you have. It’s best to review your home insurance policy annually to make sure you’re adequately covered.

FAQs

What do you do when your house is falling apart and can’t afford to fix it?

When your house is deteriorating, and you don’t have the financial means to address the problems immediately, it can be a daunting and stressful situation. Here are some steps and suggestions to consider:

• Safety first: Before anything else, ensure the safety of your household. If urgent issues like electrical problems, gas leaks, or structural damage can result in immediate harm, consider contacting local agencies or charities that might provide emergency assistance.
• Prioritize repairs: List all your house’s issues and prioritize them. Address the most urgent problems first—those that could become more expensive or dangerous if not dealt with promptly.
• DIY where possible: Consider doing it yourself for minor repairs or tasks. Some countless online tutorials and resources can guide you through basic home repair and maintenance.
• Seek financial assistance: Government programs, local nonprofit organizations, home repair grants, and loans can help you finance your home repairs.
• Barter or trade services: If you have a skill or service to offer, see if you can barter with professionals who can help with repairs.
• Community help: Sometimes, neighbors or community members might volunteer their time or expertise. Churches, local schools, or community centers might organize events or ‘repair days’ for those in need.
• Insurance: Review your homeowners insurance policy. Some damages might be covered, especially if they result from natural disasters or certain accidents.

What happens if foundation problems aren’t fixed?

Ignoring foundation problems can lead to the following:

• Worsening structural damage: Includes cracks, misaligned doors/windows, and uneven floors.
• Reduced property value: Buyers may avoid homes with foundation issues.
• Safety risks: Severe problems could make the home unsafe or uninhabitable.
• Water damage: Cracks can let in water, causing dampness and mold.
• Plumbing breaks: Shifting foundations can damage plumbing lines.
• Higher repair costs: Delays can lead to more expensive fixes later.
• Appearance decline: The home’s look and function can be impacted.
• Loan/insurance issues: Financial institutions may deny loans or insurance.
• Pest entry points: Foundation cracks can invite pests like rodents and termites.

How do I fix my old house on a budget?

Reviving an old house on a tight budget involves planning and resourcefulness:

• Prioritize repairs: Focus on safety and structural needs first.
• DIY: Use online tutorials and rent or borrow tools.
• Reuse materials: Repurpose what you have.
• Shop secondhand: Check salvage yards and thrift stores.
• Buy in bulk: Save by purchasing materials in large quantities.
• Clean vs. replace: Sometimes, a good clean is all you need.
• Hunt for deals: Watch for sales and discounts at home stores.
• Barter: Exchange skills or items for services or materials.
• Seek financial aid: Look into grants or low-interest loans.
• Renovate step-by-step: Focus on one room at a time.
• Use community tools: Borrow from tool libraries or attend community workshops.
• Get advice: Consult with local experts or online forums.
• Be patient: Waiting for deals and learning skills can be cost-effective.

Get insurance to protect your home

Often, unexpected repairs are due to losses covered by insurance. So it’s important to carry adequate home insurance coverage. Use our online quoting system to compare rates from several companies in minutes.

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