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Imagine if your home helped pay for itself.

Updated: Jan 2, 2022

With housing affordability skyrocketing nationwide, homeowners are turning to renovation options like Accessory Dwelling Units (ADUs), home energy efficiency, and solar to earn money on the home they already own. With so many home renovation loan options available, including 203k loans, VA loans and fix-and-flip loans, it makes financial sense. How does it work?

Imagine George who buys a small $350,000 single family home with 1,500 square feet that needs remodeling. At today’s mortgage rates, George will pay $2,919 in monthly mortgage payments. George does what most homebuyers do, according to the National Association of Realtors: Spend $19,000 on credit cards to make basic improvements at a 25% interest rate – as high as $4,750 in the first year!

George’s Net Monthly Payment*

$2,522 monthly mortgage + $397 credit card payment (interest only) = $2,919

His neighbor, Kyle, bought a similar house but remodeled it using a Renovation Loan from loanDepot ( Kyle converted his detached garage into a 1-bedroom rental unit and charges $1,500 rent. He also added solar and then switched to electric cars to save $60 gas each week. Kyle’s total monthly mortgage payment is higher ($3,254), but his interest rate is much lower than a credit card and the interest payments are tax deductible. While only your CPA can estimate your tax deductible portion, we can estimate the following:

Kyle’s Monthly Payment**

$3,254 monthly mortgage - $200 electric bill - $240 per month for gas + $1,500 rental income ____________________ $1,314 monthly payment

So Kyle is paying $1,605 per month less for a bigger, remodeled home.

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