If you’re house hunting and finding fewer options within your budget than you’d hoped, you’re not alone. A May 2025 study from the National Association of Realtors® found that many major cities now have fewer affordable homes for low- and middle-income buyers compared to pre-pandemic levels.1
Still, even with limited housing inventory in some areas, buyers do have options. If you’re struggling to find a move-in ready home in your desired area and price range, a renovation loan might offer a path forward. These loans could enable you to buy a home in need of upgrades and then finance those renovations as part of your monthly loan payment.
Understanding Current Housing Supply
The U.S. has faced a housing shortage for years, with market experts tracing the root of the issue back to the decade following the Great Recession.2 Housing supply and affordability were further strained during the COVID-19 pandemic.2
The good news in spring of 2025 is that the supply of affordable homes has ticked up slightly. Homes affordable to households making $75,000 to $100,000 made up 21.2% of the market in March 2025, up from 20.8% a year earlier.3 While it’s encouraging to see gradual improvement, it’s still well below 2019 levels, when 48.8% of homes were within reach for middle-income buyers.3
What this means for middle-income homebuyers depends on their location.
- Some markets, like Indianapolis, Birmingham and Des Moines, are nearing pre-pandemic levels of affordable housing availability.
- Others, such as Dallas, Houston, Atlanta and Phoenix, are recovering more slowly.
- Meanwhile, cities like Miami, New York and Los Angeles are seeing affordability slip even further.1
This is a big reason it’s important to Newrez to offer renovation loans—we want to do all we can to help qualified borrowers achieve their homeownership goals, including in areas facing supply constraints.
How Renovation Loans Can Help
Does this sound like you?
- You’re hunting high and low in your ideal school district, but the only homes you can afford are decades older than your preference and have outdated finishes.
- You’ve found a home that’s just down the road from extended family, but it’s too small for your growing family.
- The property you’ve found close to your new job needs considerable repairs.
Opening your search to houses in need of repairs or upgrades could broaden your options. You can then use a renovation loan to perform the necessary projects.
How It Works
After you get estimates of what your renovations will cost, we will use this number to calculate your home’s value post-renovations. This will help determine your loan amount, if you qualify.
Renovation loans cover these projects and beyond:
- Make cosmetic upgrades like new countertops and flooring
- Replace electrical or HVAC
- Get rid of hazards like lead-based paint or mold
- Fund major projects such as adding a second story or expanding the home’s footprint
Depending on which type of renovation loan you get, a portion of the funds will typically be disbursed at closing and then the rest will be issued as each stage of renovation is completed. Go here to learn more about different renovation loan types.
Make Your Home Your Own
Renovation loans could open up a world of possibilities to you as you search for a home, at an interest rate that isn’t much higher than that of a standard loan. That way, you can create the home of your dreams.
Want to learn more? Our loan experts are eager to answer your questions. Connect with us today.
National Association of Realtors® is a registered trademark of the National Association of Realtors and is not affiliated with Newrez LLC.
This is not a commitment to lend. All loan programs are subject to credit, underwriting, and property approval. Programs, rates, terms and conditions are subject to change without notice. Other restrictions apply.
References:
2 The State of Housing in America | U.S. Chamber of Commerce
