Buying a Historic Home: A Guide

The idea of living in a historic home can be exciting. Historic homes conjure notions of unusual or even unique architecture, prime locations in the heart of the city, and the thrill of being able to live in and own a link to important people or events.

But the reality of buying a historic home is much more complicated. These are older homes that may be more difficult, time-consuming, and expensive to maintain and repair. They also may come with restrictions on what you can do with them, and may be difficult to appraise, finance, and insure.

What Is a Historic Home?

The United States established legal definitions for recognizing historic properties through the Antiquities Act of 1906, the Historic Sites Act of 1935, the National Historic Preservation Act of 1966, and subsequent amendments to those laws. Properties that meet the criteria and are nominated by state historic preservation organizations are eligible to be listed on the National Register of Historic Places, which as of December 2023 includes more than 98,000 sites.

Historic homes usually must be at least 50 years old and meet integrity guidelines, which means it generally needs to have retained its original design and appearance.

Additionally, homes are evaluated on a significance basis, which includes their connections to historical events, and people of historical importance. It also can mean they embody an important architectural style, or are likely to provide important information about a historical era, person, or event.

A listing in the National Register of Historic Places comes with no specific rules on maintenance, renovations, or home improvements. Nothing in federal law prohibits the owners of these properties from tearing them down and building new homes.

But local and state governments may restrict what owners of historic homes are allowed to do with or to their properties. These restrictions, of course, vary widely. For example, homeowners might be prohibited from putting up a fence on a historic property, or removing or replacing anything that affects the historic appearance or function of the home. They also could be limited to a historically accurate palette of colors when repainting the exterior.

What is a historic district?

A historic district designates a group of buildings as architecturally or historically significant. In general, this designation is intended to preserve the appearance and character of a neighborhood or other area. The details of this designation vary significantly by district.

For example, Pensacola, Florida, boasts four distinct historic districts, each focused on preserving different components of the city’s past. Each has different types of structures and styles that the district monitors and attempts to preserve.

Who Decides What’s Historic?

You now know a bit more about what makes a house historic. But how does a property attain historic status? A home typically needs to be declared historic by local or state governments, or the federal government.

State historic preservation organizations

State historic preservation organizations — sometimes referred to as SHPOs — will have specific guidelines for what qualifies as historic in the state. In some cases, SHPOs have a process to help property owners determine whether their home is historic.

National Register of Historic Places

Owners, preservation societies, government agencies, and other organizations can nominate a property for a listing on the National Register of Historic Places. If the nomination is finalized on a state level, it can be reviewed by the NRHP.

Reasons To Buy a Historic Home

Buying a historic home is a dream come true for many. Here are some of the common reasons why people want to buy a historic home.

You’re helping preserve history

When you buy a historic home, you quite literally own a piece of history. If you love history, then the appeal of owning and preserving a home for prosperity is undeniably attractive. When you move in, you can imagine your life connecting with the lives of significant people and events that occurred there.

Historic homes have charm

Historic homes often possess “unmatched character and architectural details that tell a story,” says Josh Hudson, a real estate agent in Virginia Beach, Virginia. Examples may include a large fireplace, built-in bookcases, original cabinets and hardware, crown molding, a phone nook, or wide-plank flooring. If you’re looking for a unique home, then buying a historic home might be the right fit.

They usually are in high-demand locations

Historic houses often are located in high-demand areas, such as the picturesque downtown district in St. Augustine, Florida, dubbed America’s oldest city for being established in 1565. Buying a historic home could help you unlock the sought-after location you want.

It may be a good investment

Like any home purchase, a historic home might be a good investment. Such homes often are located in high-demand neighborhoods, and the charm that attracts you is likely to appeal to other buyers willing to pay a premium for it.

“Historic homes located in desirable neighborhoods have the potential for appreciation over time,” says Joshua Martin, owner of the real estate investment company Atticus Home Buyers in Milwaukee. “As these homes are often limited in number, their value may increase as they become more sought after.”

Reasons To Avoid a Historic Home

Although historic houses often are packed with character, there are some disadvantages to consider.

Financing is more complicated

Purchasing a historic home can be more difficult than buying a nonhistoric home. In general, a historic home in need of repairs will lead to more financing hoops for you to jump through.

For example, outdated electrical wiring or plumbing might be an issue for mortgage lenders. If the home requires a lot of work due to its age, you might need a Federal Housing Administration 203(k) loan, which includes funding options for repairs.

But if the home is in great shape, you might be able to pursue a range of mortgage types, like conventional loans — possibly a jumbo loan — and FHA loans.

It may be difficult to insure

In terms of homeowners insurance, the age of historic homes can make them more challenging to insure. Not only can older construction methods pose a risk, but the cost of rebuilding a historic home also can be significantly higher than the market value, making it risky to insure. While it’s still possible to get insurance coverage for a historic home, owners can expect to pay higher premiums than their neighbors.

It will need more maintenance

If you’re looking for a low-maintenance home, you’ll want to avoid older properties.

“Historic homes may require more maintenance and upkeep compared to newer properties,” Martin says. “It’s important to consider the potential costs and time involved in preserving and restoring the home’s historical features.”

Renovations may be more complicated and expensive

Historic houses might require renovations with historic materials that maintain the home’s integrity but can add a lot to the final cost. For example, repairing plaster walls instead of drywall can get expensive quickly. If you’re planning to renovate or repair the property, be prepared to pay more than you would for a more modern property.

There may be restrictions on how you can use the home

Some historical homes involve restrictions on what you can do to your property.

“Depending on the home’s historical designation, there may be restrictions on renovations and modifications,” Martin says.

Before you commit to buying a historic home, take some time to research any limitations set by the local preservation board or other authorities. These may include processes that require you to submit any proposed renovations for review and approval of their historical compatibility or sensitivity. If you find such regulations too restrictive, then buying a historic home might not be the right fit.

How To Find Historic Homes To Buy

If you’re looking to buy a historic home, an experienced real estate agent or Realtor can be a valuable resource. An agent who specialized in historic homes can help you navigate the market in your area.

You also can learn about the market by checking out websites that specialize in listing older homes, such as OldHouses.com and Circa.

Financing a Historic Home

Financing a historic home, or any home, is a major financial commitment. The overall process of financing a historic home is the same as buying a modern home, which involves getting mortgage preapproval, submitting your documents to a lender, ordering a home inspection and home appraisal, making a down payment, and paying closing costs.

But when it comes to historical houses, the details of the process may change. Historic homes that need significant maintenance or repairs might be ineligible for basic FHA or Veterans Affairs loans, which have strict minimum property requirements.

A historic home also presents a difficult appraisal challenge. If there are few or no comparable homes in the area, the appraisal could come in lower than expected and limit how much a mortgage lender may approve you for.

Getting and Assessing the Home Inspection

When you make an offer on a historic home, it’s essential to include an inspection contingency in your offer, and in the purchase and sale agreement. If the inspection finds safety or functional problems that require expensive repairs, the contingency will let you cancel the deal without penalty.

“Due to their age, historic homes may have hidden issues,” Martin says. “Hire a qualified inspector who specializes in historic properties to thoroughly assess the home’s condition.”

Some of the issues common to historic homes include:

• Foundation flaws.
• Mold.
• Outdated electrical systems.
• Deteriorating plumbing.
• A roof that needs repairs or replacement.
• Pests.

An inspection should uncover any potential problems with the home. You may decide to continue with the sale even after finding problems, but you’ll do so knowing exactly what you’re buying.

Tax Implications of Buying a Historic Home

There are a number of tax incentives for owners of historic homes, in addition to the typical tax benefits of owning a home.  

The National Trust for Historic Preservation offers the historic tax credit of up to 20% of the cost of approved rehabilitation and preservation work on recognized historic properties that generate income. Though commercial properties are the program’s primary beneficiary, home-based offices and businesses may qualify.

Additional state and local programs also exist, with benefits and qualifications varying by location. Some states and local jurisdictions may offer property tax exemptions for historic homes. You’ll want to check with your property tax authority to see if you qualify for any programs.

Some historic homes qualify for historic preservation easements that also may provide the owners with tax relief. The easement is a legal agreement the owner signs on to that restricts changes to the property and preserves its character. Donating the easement to a preservation group to enforce may count as a charitable donation the owner can claim on their income taxes.

Maintaining a Historic Home

Expect a historic home to require more maintenance than a modern home. Common maintenance issues that owners of historic homes may face include:

• Maintaining unusual details. Historic homes often have unique or unusual design or construction details that give them charm. But maintaining those details may require unusual or outdated materials that may be expensive and difficult to find.
• Caring for wood floors. Wood flooring wears down over time, and maintaining, refinishing, or replacing it with appropriate materials may require extra work and cost.
• Preserving plaster walls. Plaster walls need to be carefully cleaned on a regular basis to avoid cracking and the need for expensive repairs.
• Masonry repairs. Intricate or older masonry work can be difficult to repair and maintain. If the masonry work is porous, homeowners may need to maintain it regularly to protect the structural integrity of the home.
• Architectural compatibility. Older homes often were built with now-outdated tools and techniques that need to be replicated to maintain the integrity of the home’s architecture. You may need to work with a specialized contractor to meet those requirements.

Maintenance assistance for historic homes

Owners of historic homes may be eligible for financial assistance to help them maintain the integrity of their homes. For example, the federal government’s Historic Preservation Fund awards up to $150 million per year in grants to organizations committed to preservation. Some historic home restoration projects might qualify for grants of up to $500,000 — if you commit to matching the grant funds.

FAQ: How To Buy a Historic Home

Here are answers to common questions about buying a historic home.

The Bottom Line on Buying a Historic Home

Buying a historic home is an adventure. Prospective homebuyers ready to commit to an ongoing maintenance project may truly enjoy living in a home with tons of character. The key is to be clear on your homeownership goals before pursuing a historic home purchase.