What You Should Consider Before Buying an Old House
Some or all of the mortgage lenders featured on our site are advertising partners of NerdWallet, but this does not influence our evaluations, lender star ratings or the order in which lenders are listed on the page. Our opinions are our own. Here is a list of our partners.
Buying an old house can help you get into a desirable neighborhood or afford a larger home, not to mention potentially preserving a piece of history. But houses built decades or even centuries ago often have quirks (both good and bad) that you won't find in newer construction.
Before you fall in love with that original woodwork, get acquainted with the hurdles that can come with buying an older home.
Get an inspection (or two)
A home inspection should be part of the purchase process for any home, but with a house that's significantly older, a basic inspection may not be enough.
"Buying a vintage home from the 17-, 18- or early 1900s, the construction is totally different," says Scott Campbell, a Milwaukee-based real estate agent with Re/Max United. "A standard home inspector might not be used to it." Finding an inspector who specializes in or has experience with historic homes could be a good first step.
If you're looking at an old home that needs extensive rehabilitation, an evaluation from a contractor or a structural engineer could provide reassurance that your fixer-upper isn't a faller-downer.
Environmental remediation could be another item to make room for in your budget, Campbell says. Homes built before 1978 may have lead paint, and even homes built after that could have asbestos or other hazardous materials.
Figure out financing
Buying an older house that needs work can be a way to get into a neighborhood you couldn't otherwise afford, according to Brent Ludwig, a real estate agent with St. Louis-area Century 21 Advantage. But in order to make it move-in ready, you may need to do some less-than-glamorous renovations (think: buying a new furnace or replacing old wiring).
You can finance the purchase and repair of an older home in one fell swoop with a renovation loan. With these mortgages, it's important to have accurate estimates from contractors and tradespeople so you can be sure the amount you borrow will cover your proposed renovations.
Renovation loan options include the FHA 203(k) loan, the HomeStyle loan from Fannie Mae and the CHOICERenovation loan from Freddie Mac. An FHA 203(k) loan can be an especially attractive option for first-time home buyers, since loans insured by the Federal Housing Administration often have more lenient qualification requirements.
Research restrictions and easements
If the home is part of a historic district or has a famous name attached to it, there may be rules about the modifications you can make. These usually crop up at the local level.
"Preservation organizations differ widely in what they will allow," says Mark C. McDonald, president and CEO of the Georgia Trust for Historic Preservation. Some take what McDonald refers to as a "museum approach," designating strict limits for colors, materials and other changes to the properties, while others are more flexible.
An older home may also have a preservation easement, which is meant to ensure the property's historic character is maintained. The organization that holds the easement determines what changes are permitted. The terms of an easement can cover the home's interior as well as the exterior, so if you're intending to make updates, you'll have to get them approved first.
If you suspect there might be a preservation easement but it's not noted on the home's public-facing listing, ask your real estate agent if they can find it on the Multiple Listing Service. You can also contact the city or town directly to double-check.
Just being on the National Register of Historic Places puts no restrictions on homeowners, however. Jim Gabbert, a historian with the National Park Service, which oversees the National Register, notes that because local landmarks or homes within historic districts are often on the National Register, it's easy to get confused about who makes the rules.
Gabbert says that inclusion on the National Register of Historic Places simply lets you know that "the property has been recognized by the federal government as having importance in our nation's history at one level or another" — it doesn't stop you from updating the kitchen.
