How an $880,000 Franklin Home Became the Right Home With One Renovation Loan

We were standing in the kitchen of an $880,000 home in Franklin, Tennessee, listing everything the buyers wanted to change. At some point the conversation shifted. They stopped asking, "Is this the right house?" They started asking, "What could this house become?"

The kitchen felt dated. The carpet needed to go. They wanted hardwood stairs, fresh paint, updated flooring, a renovated primary shower, office doors, deck repairs, and a cleaner backyard. Then we got to the basement.

The house, as it sat, was not done for them. The things you cannot easily change were exactly right: neighborhood, lot, privacy, floor plan, square footage, full basement.

Location is the one thing you cannot renovate

You can change the kitchen, the carpet, the bathrooms, the basement. You cannot pick the house up and move it. You cannot renovate the school district. You cannot add land to the lot.

Instead of "Should we buy this and spend $100,000 cash after closing?" we asked, "Can we roll the purchase and the renovation into one loan?"

The numbers on this Franklin purchase

Sales price: $880,000. Contractor repair budget: $100,000. Contingency reserve at 10%: $10,000. Estimated renovation-related fees: $7,000. Total project cost: $997,000.

That is a Fannie Mae HomeStyle Renovation conversation. Confirm current eligibility on Fannie Mae's product page. This file is an example, not a promise that your house, contractor, or appraisal will look the same.

Most buyers think they have two options

Option 1: buy it and fix it later with cash. The problem is $80,000 to $100,000 out of pocket on top of closing, moving, and a new payment.

Option 2: wait for the perfect move-in-ready house in the right location. That house is the most competitive listing on the market. It goes fast and it goes over asking.

Most people settle or stall. There is a third option.

What a HomeStyle renovation loan actually does

A HomeStyle loan lets a qualified buyer finance the purchase price, approved contractor work, a contingency reserve, and related renovation fees inside one conventional mortgage.

The seller still gets the full $880,000 at closing. The renovation funds do not go to the buyer. They sit in a renovation account and release in stages as work is completed and inspected.

How the appraisal works

The appraiser looks at the home in its current condition and "as completed" after the approved work. They review the contractor bid and scope, then estimate finished value. The lender uses that as-completed value to see whether the property can support the total project and the loan amount.

Spending $100,000 does not guarantee the value goes up $100,000. The appraiser still weighs comps, the neighborhood, size and quality, and whether the finished house is over-improved for the street. If the appraisal does not support the full project, you reduce the scope or bring cash.

Why the renovation budget was $117,000, not $100,000

The construction plan was $100,000. The extra $17,000 covered a 10% contingency, the renovation appraisal, consultant review and work write-up, draw inspections, permit allowance, and a final inspection. Those costs protect the buyer, the lender, and the project.

What got done now versus later

Phase one: kitchen, primary shower, interior paint and flooring, carpet out, hardwood stairs, deck repairs, office doors. High-impact everyday items inside the $100,000 contractor budget.

Later: basement kitchenette and bath, screened porch, major landscaping, a pool. Those wait until they live there and have more equity.

How the contractor actually gets paid

The contractor does not get $100,000 at closing. Buyer and contractor agree on scope and price. The lender approves the contractor and the project. The loan closes. Funds sit in the renovation account. The contractor finishes a stage. An inspector verifies it. The lender releases that draw.

The crew has to be comfortable with staged payments, detailed bids, documentation, and lien waivers. Not every contractor works that way. Find that out before you write.

Tell the listing agent how this closes

If the listing agent has never seen a renovation loan, the first question is whether it will actually close. Offers die because nobody explained it, not because the loan was bad.

The right agent tells the listing side before the offer hits: the seller gets the full purchase price at closing, renovation money sits in a separate account the buyer never pockets, and it closes like a conventional loan. Sellers are not afraid of renovation loans. They are afraid of the unknown.

The estimated loan structure on this file

Using 95% financing, and only if the appraisal supports the project: total project $997,000. Estimated loan $947,150. Buyer contribution toward purchase and renovation about $49,850. Standard closing costs, taxes, insurance, and escrows still apply and are sometimes offset by seller credits.

Fannie Mae publishes HomeStyle LTV limits in its eligibility matrix. Owner-occupied purchase can go up to 97% in some cases, including certain HomeReady combinations. This file used 95%. Confirm the current matrix. Do not treat these numbers as your quote.

Why this approach worked

A fully renovated version of this same house, same neighborhood, same basement and yard, at a similar price, would have been hard to find.

They did not settle for a house they did not love as-is. They did not overpay for someone else's finishes. They bought the bones and financed the work that mattered.

The house did not have to be perfect on day one. It had to make sense once purchase and renovation lived in one loan.

If you are looking at a Franklin or Middle Tennessee house that needs work but has the right location, lot, and layout, let's run the numbers. Call or text (615) 955-0461.