Funding Renovations on Big Sky Second Homes

Dreaming of updating your Big Sky getaway without draining your cash? You are not alone. Renovating a second home can add comfort, rental appeal, and long-term value, but the financing and local rules feel different than for a primary residence. In this guide, you will learn which loan options work for second homes, what permits and taxes to expect in Gallatin County, how insurance and seasonality affect your plan, and a clear, step-by-step path to get it done. Let’s dive in.

Renovation financing options that work

Mortgage renovation loans

Two major programs allow you to roll renovation costs into a mortgage on a second home:

• Fannie Mae HomeStyle Renovation permits eligible one-unit second homes and covers structural work with lender oversight, contractor documentation, and as-completed appraisals. Confirm second-home down payment and LTV limits with your lender because overlays vary. Learn more about the program on the Fannie Mae page for HomeStyle Renovation.
  • Details: Fannie Mae HomeStyle Renovation
• Freddie Mac CHOICERenovation also lists one-unit second homes as eligible, with specific LTV limits, draw inspections, and delivery rules through Loan Product Advisor. Ask your lender how they implement caps and timelines.
  • Details: Freddie Mac CHOICERenovation

Important: These loans usually require detailed contractor bids, a defined scope of work, an as-completed appraisal, and draw inspections. Budgets are capped relative to the after-renovation value, and timelines are enforced by the lender.

Loans that do not fit second homes

• FHA 203(k) is designed for owner-occupants. It generally does not work for a non-owner-occupied second home in Big Sky.
  • Program overview: HUD FHA 203(k)

HELOCs and home-equity loans

If you have equity in your primary home, a HELOC or home-equity loan can fund your Big Sky renovation. Lenders will look at combined loan-to-value and your ability to repay. HELOCs are often variable-rate and secured by your primary home, so compare costs to renovation mortgages.

Cash-out refinances

A cash-out refinance on your primary or your Big Sky second home can free up funds. Agency rules allow cash-out on second homes, but with tighter LTV and possible seasoning requirements. Ask about maximum LTVs and documentation.

• Guidance: Fannie Mae cash-out refinance

Short-term or unsecured options

For smaller projects, some owners use contractor financing, personal loans, or credit cards. These are typically higher-cost and best for limited scopes or as a bridge when timing is tight.

Big Sky permits and rental rules

Zoning and STR permits

If you plan to rent part-time, zoning and permits matter. Gallatin County’s rules for short-term rentals vary by zoning district, and some areas require permits through public health and other departments. Use the county’s tools to check your parcel’s zoning and STR requirements.

• Start here: Gallatin County STR FAQs

Building permits and inspections

Most structural, electrical, plumbing, and mechanical work requires permits and county inspections. Filing is handled through county portals and planning offices, and work cannot begin until permits are issued.

• Permit info: Gallatin County zoning and permits

HOA covenants and local overlays

Many Big Sky properties sit within HOAs or condo associations. CC&Rs may control exterior changes, materials, and rental rules. Large projects can intersect with area improvements and resort-district policies, so review local oversight and fees.

• Area context: Big Sky Resort Area District – CIP

Taxes, appraisal, and insurance impacts

Property taxes and reassessment

Significant improvements that raise market value often increase assessed value. Montana introduced a tiered residential property tax structure effective 2025, which can change outcomes for higher-value properties. Check your anticipated impact and reassessment timing before you build your budget.

• Overview: Montana 2025 property tax information

As-completed appraisals

Renovation loans typically require an as-completed appraisal that estimates value after upgrades. Expect draw inspections, completion certificates, and lien releases before final funds are disbursed.

Insurance and wildfire risk

Wildfire exposure is a real factor in Montana. Carriers may adjust premiums, coverage, or renewals in higher-risk zones. Before you change roofing, siding, decking, or landscaping, talk with your insurer. Choosing fire-resistant materials and improving defensible space can support insurability.

• Market context: Montana insurance and wildfire trends

Costs, timing, and contractors in Big Sky

Big Sky is a resort market with premium labor costs, seasonal constraints, and logistics that can stretch timelines. Exterior work often runs late spring through early fall, while winter conditions can slow schedules and increase mobilization costs. Materials may need to be staged or shipped, and subcontractors book out early.

Montana requires construction contractors with employees to be registered and maintain workers’ compensation coverage. Always verify registration, insurance, and bonding where appropriate.

• Verify here: Montana contractor registration

Step-by-step plan and timeline

Step 0 — Define scope and budget

• Separate must-haves from nice-to-haves.
• Get two to three local bids for ballpark ranges.
• Add a 15 to 25 percent contingency for resort-market surprises.

Step 1 — Choose your funding path

• For purchase plus renovation or refinance plus renovation, discuss HomeStyle or CHOICERenovation with lenders that handle second homes in Montana.
  • Program pages: Fannie Mae HomeStyle Renovation and Freddie Mac CHOICERenovation
• If tapping equity on another home, request HELOC or cash-out quotes and confirm CLTV limits.
• If you were considering FHA 203(k) or other government rehab loans, note the primary-residence occupancy requirement.
  • Reference: HUD FHA 203(k)

Step 2 — Gather bids and documents

• Secure detailed contractor bids and scopes, including timelines, permit needs, and proof of insurance/registration.
• Expect lenders to require written bids, an as-completed appraisal, and possibly a renovation consultant depending on scope.

Step 3 — Apply for financing and permits

• Submit your loan application, work scope, and bids. Your lender will set draw schedules and inspections.
• File county permits before work begins.
  • County guidance: Gallatin County zoning and permits

Step 4 — Build and manage draws

• Start work after initial draws are released.
• Keep change orders in writing and maintain lien waiver documentation.

Step 5 — Close out and verify

• Complete final inspections, clear all liens, and provide completion certificates as required by your lender.

Typical total timeline: 3 to 9 months or more based on scope, season, permits, and contractor availability.

Pro tips to avoid delays

• Time exterior work for late spring through early fall.
• Confirm contractor schedules early and understand travel windows in peak seasons.
• Check with your insurer before exterior changes to avoid surprises in coverage or premiums.
• Verify all permits are approved before demo to keep loan draws on track.
• Collect lien waivers from all subcontractors with each progress payment.

Ready to plan your Big Sky project?

The right plan can turn your second home into the retreat you want and the asset you need. If you want local guidance on financing choices, permitting, and contractor timelines tailored to Big Sky, reach out to Carissa Maus (Paulson) for a straightforward, step-by-step approach.

FAQs

Can renovation mortgages be used on Big Sky second homes?

• Yes. Fannie Mae HomeStyle Renovation and Freddie Mac CHOICERenovation both allow eligible one-unit second homes, with specific LTV limits, documentation, and draw requirements. Confirm details with your lender.

Can I use FHA 203(k) for my Big Sky vacation home?

• Generally no. FHA 203(k) requires owner occupancy, so it typically does not fit a second home used for vacations.

Will renovating increase my Montana property taxes?

• Likely. Improvements that boost market value often raise assessed value, and Montana’s 2025 tiered structure may affect higher-value properties. Check your parcel’s specifics with the Department of Revenue or county assessor.

Do I need county permits and licensed contractors in Big Sky?

• Most structural, electrical, plumbing, and major mechanical work needs county permits and inspections. Verify contractor registration, insurance, and workers’ compensation coverage before hiring.

What if I plan to short-term rent after renovating?

• STR rules vary by zoning in Gallatin County and can require permits, including public health approvals. Review county STR guidance and your HOA rules before you invest.