When choosing a home to buy, you must make many decisions, including where you’re going to live, the size of the home and the amount of work you’re willing to put into it.
You may want to move in with no work involved, or you may not mind freshening up a couple of rooms to match your style. Or you may want to buy a home at a lower price that needs a lot of work but has good bones.
Here are a few considerations to help you decide if buying a fixer-upper or a newly constructed or recently renovated move-in ready house is the right choice for you:
— Fixer-uppers are a work in progress.
— You’ll be renovating anyway in most homes.
— Move-in ready houses cost more.
— Financing is often easier without funding the renovations.
— Fixer-uppers require a lot of planning.
— Location may or may not be a deciding factor.
[Read: What to Know About Buying a Multigenerational Home]
Fixer-Uppers Are a Work in Progress
Fixer-uppers are often the top choice for first-time homebuyers who are limited by their budget and for people who prefer to take on a project.
Whether you’re looking at fixer-uppers because they fall in your price range or because you like the idea of taking on a major renovation, the scope of the work involved has to be something you’re willing to take on.
With a tight renovation budget, you may do most of the renovations yourself or space out the remodel room by room while you save up. If that doesn’t appeal to you, a fixer-upper might not be the house for you.
If the work needed in a fixer-upper sounds unappealing, narrow your search to new construction and recent renovations that check all the boxes. If you like the idea of renovating right away to customize the space, focus on fixer-uppers.
You’ll Be Renovating Anyway
Unless you’re moving into a new, customized house, there’s a good chance you’ll be making at least minor renovations to your home. Raf Howery, founder and CEO of home information and data company Kukun in Menlo Park, California, estimates 60% of all homes bought get remodeled to some extent, regardless of their condition at the time of the sale.
In many cases, even if a kitchen or living room doesn’t feel dated, you may want to paint walls, replace flooring and restain or add cabinets, for example. “Most people will have to put that stamp on their home,” Howery says.
If you want to tweak and customize your home, you may want to buy an existing house with a lower price tag to offset the additional money you’ll spend on renovations.
[Read: 8 Home Renovations Under $20,000]
Move-In Ready Houses Cost More
As with any home purchase, your budget will likely be a major factor in the choice between a new construction house and a fixer-upper.
The median price for an existing home in the U.S. was $393,400 in January 2025, according to the Federal Reserve Bank of St. Louis. Meanwhile, the median price for new homes was $446,300.
That difference of $52,900 is partly due to the fact that many new construction houses are built at the higher end of a local market’s price range, with new systems and materials that drive up the price.
On the other hand, fixer-uppers may come with additional costs related to aging systems and possibly neglect.
From a homeowners insurance perspective, a new construction house is far less of a liability than a fixer-upper. “Our underwriting appetite has always been for newer homes that have been built better and lived in by responsible people,” says Jason Metzger, senior vice president and head of underwriting and risk management at PURE Group of Insurance Companies in White Plains, New York.
While older homes can certainly be covered by home insurance policies, the greater risk for problems can lead to a higher premium.
Financing Is Often Easier Without Funding Renovations
When you purchase a fixer-upper that needs major renovations before you move in, you’ll likely need to finance the cost of the remodel as well as the purchase of the home.
Many banks that offer conventional mortgages will not approve a loan greater than the current value of the property because lending money for planned renovations is considered a risky move.
There are a few mortgage programs through the federal government that can make it possible, including:
— Federal Housing Agency 203(k) loan.
— Fannie Mae HomeStyle Renovation mortgage.
— U.S. Department of Veterans Affairs renovation mortgage.
“It’s important to appreciate that these types of loans often come with significant red tape or a higher price tag, and in some cases both,” Lauren Anastasio, a senior certified financial planner with financial investment company Vanguard who is based in the Philadelphia area, wrote in an email.
Expect limitations when it comes to the contractor you’re allowed to choose for renovation work with these federal loans, Anastasio says. If you opt to find a renovation loan through a private lender, you’ll likely pay a higher interest rate.
If you can afford the renovations without a loan, you may be better off financing your mortgage separately from the cost of the needed rehabilitation. You may be able to secure a separate personal loan at the same time of your home purchase, or wait for some of the renovations to build up enough equity to get a home equity loan.
[Read: 8 Countertop Trends For 2025]
Fixer-Uppers Require a Lot of Planning
For a fixer-upper that needs extensive work, you’ll likely have to begin planning your renovation in advance, including establishing your total budget for the project, determining the scope of work needed and creating your timeline.
You’ll want to recruit a team of professionals that will help you complete the renovation, and that may include more people than you think. If your renovation will be lengthy and involve heavy construction, you may need a construction insurance policy to protect the property.
But your insurance company can also be a resource for determining priorities in the house’s rehab, Metzger says: “We can help you pick out those things (in the home) that might lead to deferred maintenance issues.”
Location May or May Not Be a Deciding Factor
A glaring difference between new construction houses and fixer-uppers is often the location. You’re more likely to find new houses built in master-planned subdivisions in the suburbs. If you’re looking to live closer to a city center or in a more established neighborhood, your chances of finding a fixer-upper are much higher.
The importance you put into location is based on your preferences. Proximity to the city center can make for a short commute and provide easy access to entertainment, stores and other attractions. “Some folks will definitely move to the suburbs, looking for larger homes,” Howery says.
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Buying a Fixer-Upper vs. Move-in Ready: Which Is Better? originally appeared on usnews.com
Update 03/24/25: This story was published at an earlier date and has been updated with new information.
