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Many real estate agents list fixer-upper houses with a note in the property description that only cash offers are allowed. Why?

When a property is listed as “cash only,” it generally means there are known property defects that will prevent a home buyer from obtaining traditional financing. It is assumed that only cash buyers will be able to purchase the property because the property would not “pass” an appraisal if traditional financing is being used. However, the listing agent may not be aware that renovation financing IS available.

Renovation mortgages allow a home buyer to purchase a property and roll renovation costs, fees, and reserves into their new mortgage. There are many different types of renovation mortgages, including Fannie Mae HomeStyle Renovation, FHA 203(k), and USDA Rehabilitation and Repairs loans. 

The home buyer is responsible for finding and hiring a contractor to make repairs and obtaining a bid for those repairs. The lender uses the contractor’s bid to get an appraisal based on the future value of the home, assuming all improvements have been made. It is this ability to lend against the future value of a home that allows home buyers the option of financing repair costs. Renovation work begins after the loan closes.


Jennifer Goldsby, NMLS #591226 | VP, Renovation Lending

Diamond Residential Mortgage Corporation NMLS #186805 | Equal Housing Opportunity

Disclaimer: The postings here reflect my personal opinion. They do not necessarily represent the opinions of Diamond Residential Mortgage Corporation and its management.