Yes, you can sometimes get a home loan for more than the purchase price — but only under certain circumstances.
Most traditional mortgages are designed to cover either the agreed purchase price of the home or its appraised value, whichever is lower. That means if you’re buying a house for $300,000 but it appraises for $290,000, your lender will likely cap the loan at $290,000 unless you bring extra cash to the table.
The good news is that there are special loan options that let you borrow extra when buying a house. One of the most common is the FHA 203(k) loan, which allows buyers to finance both the purchase price and the cost of approved repairs or upgrades in a single mortgage.
Other renovation loans and certain conventional programs may also help. In addition, some lenders offer ways to bridge appraisal gaps, though those usually require excellent credit and strong financial reserves.
Why would you need to borrow more than the purchase price?
There are a few situations where buyers wonder if they can borrow extra money when buying a home and roll it into their mortgage. While not every lender allows this, these are the most common reasons people ask for a mortgage for more than the purchase price.
Repairs or renovations
Many homes need updates after closing, from fresh paint to major structural fixes. Renovation loans like the FHA 203(k) can bundle those costs into your mortgage so you don’t have to pay out-of-pocket.
Covering an appraisal gap
In hot housing markets, homes sometimes sell for more than the appraisal value. You may want to borrow more to cover that gap.
Rolling in closing costs
Closing costs typically run 2–5% of the loan amount. Some lenders let you add these fees to your mortgage instead of paying them upfront.
Using equity during a refinance
Homeowners refinancing their mortgage may borrow more than the current balance owed and take cash out using their home’s equity.
Each of these situations requires a specific loan type and lender approval, but it is possible under the right circumstances.
Option 1: FHA 203(k) Loan for Renovations
One of the most common ways to get an FHA loan for more than the purchase price is through the FHA 203(k) loan. Unlike a standard mortgage that’s based only on the current value of the home, a 203(k) loan is based on the future appraised value after renovations are completed. This means you can roll repair and improvement costs into your mortgage instead of paying for them separately.[1]
There are two types of FHA 203(k) loans:
- Limited 203(k). Best for smaller projects, this version lets you borrow up to $35,000 for non-structural improvements like painting, flooring, roofing, or energy-efficient upgrades. It’s designed for quicker projects and doesn’t require a HUD consultant.
- Standard 203(k). Intended for major renovations, such as structural repairs, room additions, or total kitchen remodels. This type requires you to hire a licensed contractor and a HUD-approved 203(k) consultant, who oversees the project and ensures the work adds real value to the home.
Both versions require a minimum 3.5% down payment and generally a credit score of 620 or higher. Timelines vary, but projects usually need to be completed within six months.
If you’re asking, “Can I get an FHA loan for more than the purchase price?” the answer is yes — if you use a 203(k) loan and the improvements are likely to increase the home’s value.
Option 2: Fannie Mae’s HomeStyle Loan
Another way to borrow more than the appraised value is through a Fannie Mae renovation loan, known as the HomeStyle loan. This program lets you roll the cost of repairs or upgrades into your mortgage, whether you’re buying a new home or refinancing your current one. Unlike the FHA 203(k), it’s more flexible and can be used on a primary residence, a second home, or even an investment property.[2]
The HomeStyle loan also allows for a broader range of projects, including luxury improvements like swimming pools or high-end kitchens. In some cases, it even allows limited DIY work as long as the repairs are non-structural and under a certain budget.
Requirements include:
- At least 5% down (higher than FHA’s 3.5%)
- A higher credit score, typically 620–640 minimum
- A detailed renovation plan from a licensed contractor
For buyers who want more freedom in the type of renovations they finance (and especially for those considering second homes or investment properties) the HomeStyle loan can be a strong alternative to an FHA 203(k).
Option 3: VA Renovation Loans (if eligible)
Veterans, active-duty service members, and some surviving spouses may be able to use a VA renovation loan to borrow more than the purchase price of a home. This loan combines the cost of buying the home with the funds needed for renovations into one VA-backed mortgage, making it easier to finance improvements upfront.[3]
Like the FHA 203(k), the VA renovation loan has specific rules.
- You’ll need to hire a licensed contractor, provide detailed renovation plans, and get an appraisal that reflects the home’s expected value after improvements.
- The VA will only approve projects that make the home safe, livable, and structurally sound, which means cosmetic-only upgrades like swimming pools are not eligible.
Many veterans don’t realize this option exists, so it tends to be underutilized. But for those who qualify, it can be a powerful tool to buy a fixer-upper and roll the cost of necessary repairs into one affordable loan.
Can you get a loan for more than the appraised value?
No, you generally can’t get a mortgage for more than the appraised value of the property. Lenders almost always base your maximum loan amount on the appraised value of the home, not the contract price.
If the home appraises lower than your agreed-upon purchase price, you face what’s called an appraisal gap. In that situation, you have a few options:
- Pay the difference out of pocket
- Renegotiate the purchase price with the seller (if they’re willing)
- Use a larger down payment or sometimes a second loan to cover the gap
Some renovation loans, like the FHA 203(k) or Fannie Mae HomeStyle, calculate based on the future value after renovations, but for standard mortgages, the appraisal sets the cap.
Can I get a bigger FHA loan later?
Homebuyers often ask: Can you get an FHA loan more than once? The answer is yes, but with limitations.
FHA loans are designed for primary residences, so you typically can’t carry two FHA mortgages at the same time unless you meet very specific exceptions (such as relocating for work or outgrowing your current home).
If your first FHA loan has been paid off or refinanced into a conventional loan, you can apply for a new FHA loan when buying your next home. There’s no lifetime cap on how many FHA loans you can use, but you must always meet standard requirements, including minimum credit scores, down payment rules, and debt-to-income limits.
So while you can’t usually “stack” FHA loans, you can absolutely use the program again later in life if your circumstances change. This flexibility makes FHA a popular option for first-time buyers who may want to buy another home in the future.
Using home equity loans or cash-out refinancing for repairs
If you already own your home, you may be able to borrow more than the purchase price by tapping into your home’s equity. Equity is the difference between what your home is worth and what you still owe on your mortgage. You can access it through several options:
- Home equity loan: Works like a second mortgage with fixed monthly payments. Best for homeowners who want a lump sum for a big project.
- Home equity line of credit (HELOC): A revolving credit line you can draw from as needed, similar to a credit card. Good for ongoing or smaller projects spread out over time.
- Cash-out refinance: Replaces your current mortgage with a new, larger loan. You get the difference in cash at closing, which can be used for renovations or repairs.
These methods can be especially useful for projects that add value to your home, like replacing a roof, updating plumbing, or upgrading energy systems. Keep in mind, refinancing restarts your mortgage term, so you could end up with higher monthly payments or a longer payoff timeline.
Pros and cons of borrowing more
Deciding whether to borrow more than the purchase price depends on your finances and goals. Lenders will look closely at your debt-to-income (DTI) ratio, credit score, and equity before approving a larger loan, so it’s important to weigh the benefits and risks.
✅ Pros
- Complete necessary repairs or renovations right away
- Increase the home’s value and long-term livability
- Roll costs into one mortgage
❌ Cons
- Higher monthly payments that could stretch your budget
- Stricter loan terms and more documentation required by the lender
- Longer or more complicated closing timelines, especially with renovation loans
If your DTI is already high or equity is low, taking on extra debt may not make sense. But if improvements boost resale value or address urgent needs, borrowing more could be worth it. Always consult with your loan officer before committing.
How to qualify for a larger home loan
If you’re hoping to borrow more than the purchase price — whether for repairs, upgrades, or to cover an appraisal gap — lenders will look closely at your finances before approving.
Tips to improve your chances
Strengthening your profile can improve your odds of qualifying for a bigger loan amount. Here’s what you can do that might help:
- Improve your credit score. A higher score signals lower risk to lenders and can unlock better loan terms and higher borrowing limits. Pay bills on time, reduce revolving balances, and avoid opening new credit lines right before applying.
- Lower your debt-to-income (DTI) ratio. Lenders prefer your housing costs and debts to stay under about 36% of your gross income. Paying down credit cards, car loans, or personal debt can free up room for a larger mortgage.
- Make a larger down payment. Putting more money down reduces the lender’s risk. It can also help you avoid private mortgage insurance (PMI) and demonstrate you’re committed to the investment.
- Work with lenders who offer renovation loans. Specialized products like FHA 203(k) or Fannie Mae’s HomeStyle loan allow you to borrow based on the future value of the home after improvements, giving you access to funds above the purchase price.
Taking these steps doesn’t guarantee approval, but they’ll put you in the strongest position when asking for more than the home’s listed price.
Summary: Can you borrow more than the home price?
Yes, it’s possible to get a home loan for more than the purchase price, but only in specific situations. Lenders don’t allow you to simply add extra money onto a mortgage without a qualifying reason. Instead, you’ll need the right loan program and supporting documentation.
Key takeaways
- Special programs: You can borrow above the purchase price with loans like the FHA 203(k) or Fannie Mae HomeStyle, which finance renovations based on the home’s future value.
- Covering gaps: Some buyers use extra funds to cover appraisal gaps or roll certain closing costs into their mortgage, depending on lender rules.
- Limitations: You can’t just “pad” your loan to borrow extra cash for furniture or unrelated expenses.
- Next steps: Talk to your lender early to find the right mortgage product for your needs and understand the rules for borrowing extra when buying a home.
Ready to explore your loan options? Let Clever connect you with an experienced local real estate agent today who can help you understand your options, and help you find lenders in your area offering the best products for your budget and goals.