Should I Buy a Fixer-Upper as My First Home in Orange County?

A home that needs work can sometimes be the path into a location that would otherwise be out of reach. You trade move-in comfort for the chance to update it your way.

I'm Jeanette Nelson, a REALTOR® with Jeanette Nelson Real Estate, Keller Williams Realty, serving Orange County, Huntington Beach, Costa Mesa, Fountain Valley, and surrounding areas. When a first-time buyer asks me about a fixer, we start with two questions: how much work can you live with, and how much can you afford to fix after you close?

A fixer-upper is a good fit when:

• You have savings left after closing. Repairs almost always cost more than the first guess.
• You can live with the work. Some projects make parts of the home unusable for weeks.
• The problems are cosmetic or planned. Paint, flooring and an older kitchen are very different from foundation or sewer line problems.
• You have time. Getting bids, permits and contractors takes patience.

If major work is needed and your budget is already stretched, a move-in-ready home may be the calmer choice.

Two common options let you finance the purchase and the repairs together in one loan:

FHA 203(k). HUD offers two versions:

• Limited 203(k) is for minor remodeling and nonstructural repairs. HUD raised its cap on total rehabilitation costs to $75,000 in 2024. A 203(k) consultant is optional.
• Standard 203(k) is for larger projects, including structural work. It has a $5,000 minimum repair cost, requires an FHA-approved 203(k) consultant, and the total loan must stay within the FHA limit for the area.

Fannie Mae HomeStyle Renovation. A conventional loan that adds renovation costs to the loan amount, based on the home's expected value after the work. Fannie Mae says down payments can be as low as 3% for first-time buyers, and you choose your own contractor, who the lender reviews.

With both, the repair money is held and paid out as work is completed. Confirm current limits with lenders, since program rules can change. This is general information, not lending advice.

More than usual. A general home inspection is the starting point. My article on what to expect at your first home inspection explains how it works.

For a home that needs work, also think about:

• Sewer line camera inspection for older homes.
• Roof inspection if the roof is near the end of its life.
• Termite and wood destroying pest inspection, which is common in California sales.
• Foundation or structural review if the inspector sees cracks or uneven floors.
• Contractor bids for the big items, while you still have your inspection contingency.

If the home was built before 1978, federal rules apply. HUD's guidance on the Lead Disclosure Rule says the seller must give you a 10-day period to test for lead-based paint before you are obligated to buy, unless you agree in writing to a different period or waive it. The seller must also disclose what they know about lead-based paint and provide an EPA-approved pamphlet.

The buyer schedules and pays for the inspection or risk assessment. If you are planning renovations that disturb paint, this information matters even more.

A fixer often has a history of past work. Before you buy, check the permit history for that specific property so you know whether additions, garage conversions or remodels were permitted.

In Huntington Beach, the City's permit guide says building permits are required to erect, enlarge, alter, remove, demolish or repair a building or structure, with listed exceptions. The City's Building and Inspections page offers online permit search and record research. For homes in other Orange County cities, check with that city's building department.

The price should reflect the work. These steps help:

1. Get repair estimates early, ideally before or during your inspection period.
2. Add a cushion for surprises once walls and floors are opened.
3. Compare the price to similar homes in the same area that are already updated, minus the realistic cost of the work.
4. Keep your contingencies in place until you have the information you need.
5. Plan your cash to close too. My article on first-time buyer closing costs helps you set aside money for closing day so repair savings stay untouched.

If you are wondering whether a fixer-upper fits your first-home plan, I'd love to walk through your budget, your timeline and the kind of work you are comfortable taking on. Call or text me at 714.366.8575 | DRE: 01397168, or contact me. Jeanette Nelson is a REALTOR® with Jeanette Nelson Real Estate, Keller Williams Realty, serving Orange County, Huntington Beach, Costa Mesa, Fountain Valley, and surrounding areas.