There’s no denying that affordability in today’s housing market is a real challenge. Rising home prices, higher mortgage rates, and tight inventory can make buying a move-in-ready home feel out of reach for many. But that doesn’t mean you have to put your dreams of homeownership on hold.

One potential solution? Buying a fixer-upper. If you’re willing to roll up your sleeves (or hire someone who will), purchasing a home that needs some TLC can be a cost-effective way to achieve your goal. Here’s everything you need to know about buying a fixer-upper, including what to expect, how to prepare, and whether it’s the right choice for you.

What Is a Fixer-Upper?

A fixer-upper is a home that’s generally livable but needs repairs, updates, or renovations to reach its full potential. This could range from cosmetic changes, like fresh paint or new flooring, to more extensive repairs, such as updating plumbing, replacing the roof, or modernizing the kitchen and bathrooms.

While fixer-uppers require extra work, they can offer big advantages — especially in a housing market where affordability is tight.

Why Consider a Fixer-Upper?

Here are some compelling reasons why buying a fixer-upper may be worth considering right now:

1. Lower Price Point

One of the biggest perks of buying a fixer-upper is the lower upfront cost. Because these homes need repairs, they tend to be priced below comparable move-in-ready properties.

According to a survey by StorageCafe, fixer-uppers often come with price tags that are around 29% lower than turnkey homes. For budget-conscious buyers, that can make a significant difference, potentially allowing you to buy in a neighborhood you might not otherwise afford.

2. Less Competition

In a competitive housing market, move-in-ready homes often attract bidding wars. Fixer-uppers, on the other hand, may have fewer interested buyers, reducing competition and giving you more negotiating power when it’s time to make an offer.

3. Build Equity Faster

When you renovate a fixer-upper, you’re not just creating a home that suits your style — you’re also increasing its value. This means you can potentially build equity faster than if you’d bought a home that was already fully updated.

With smart, strategic renovations, you may even see a significant return on your investment when it comes time to sell. As The Mortgage Reports explains:

“If you’re a house hunter who’s not afraid of sweat equity, buying a fixer-upper could be your ticket to homeownership. Doing so could lead to big savings, even in some of the nation’s largest and most popular housing markets.”

Things To Consider Before Buying a Fixer-Upper

The idea of transforming a fixer-upper into your dream home can be exciting, but it’s important to go in with your eyes wide open. Here are some key factors to think about:

1. Do You Have a Game Plan?

Renovating a home takes time, money, and effort. Before you buy a fixer-upper, be honest with yourself about what you can handle. Ask yourself:

• Do you have the DIY skills to tackle some of the work yourself, or will you need to hire professionals?
• Do you have the time to manage renovations and live in a construction zone?
• Do you have a realistic budget, including extra funds for unexpected costs?

Being clear about your limits will help you determine whether a fixer-upper is the right fit for your lifestyle.

2. Prioritize Repairs and Upgrades

When you move into a fixer-upper, it can be tempting to tackle everything at once. But that can be overwhelming — both financially and emotionally. Instead, focus on prioritizing the most critical repairs first, such as fixing structural issues, addressing safety concerns, and making the home livable.

From there, you can space out cosmetic upgrades over time in a way that makes sense for your budget.

3. Location Matters

No matter how much you invest in renovating a fixer-upper, its future value will largely depend on its location. Before you buy, research the neighborhood to ensure it has strong long-term potential. Look for signs of growth, such as increasing home values, good schools, nearby amenities, and planned developments.

4. Get a Home Inspection

A home inspection is absolutely essential when buying a fixer-upper. A professional inspector can identify any hidden issues — like foundation problems, outdated electrical systems, or water damage — that could affect your renovation budget.

The inspection report will give you a clearer picture of what you’re getting into and help you avoid unexpected surprises down the road.

5. Budget for Surprises

Speaking of surprises, it’s important to set aside extra money for unplanned expenses. Renovations rarely go exactly as planned, and costs can add up quickly due to things like:

• Increased material prices
• Delays in construction timelines
• Unexpected repairs (e.g., discovering mold behind old drywall)

A good rule of thumb is to budget an additional 10-20% beyond your initial renovation estimate to cover any contingencies.

6. Explore Financing Options

If you don’t have the cash to cover renovation costs upfront, you’re not out of luck. Some mortgage options are designed specifically for homes that need work. For example:

• FHA 203(k) Loans: Allow you to finance both the purchase price and renovation costs in a single mortgage.
• Fannie Mae HomeStyle Loans: Offer flexible terms for both cosmetic and structural upgrades.

Each loan program has its own requirements, so be sure to talk to a trusted lender to understand your options.

Bottom Line: Is a Fixer-Upper Right for You?

Buying a fixer-upper isn’t for everyone. It takes patience, planning, and a willingness to deal with the inevitable ups and downs of home renovation. But for the right buyer, it can be a great way to overcome affordability challenges, build equity, and create a home that’s truly one of a kind.

If you’re considering taking the plunge, start by talking to a real estate agent who can help you find fixer-uppers in your budget and guide you through the process. With the right mindset and a solid plan, you could turn a less-than-perfect house into the perfect home for you.