IN A TOUGH HOUSING MARKET, OUTFITTING A NEW HOME WITH A DREAM THEATER or complete automation system could make the difference between closing escrow and watching your project languish on the market. Getting consumers to foot the bill for these upgrades, however, isn't always easy.

Home buyers may be able to buy a home theater now and pay for it later by rolling up the cost of the gear into a first mortgage, essentially financing the electronics on the same terms as the home itself. It's a marketing strategy many builders have used, while others have just begun to approach cautiously. One question some builders have as they get into digital home financing: What technology can be rolled into a mortgage?

It's a good question, really, considering many of the electronics we're talking about here have traditionally come through retail channels like Best Buy or Circuit City after the close of a new house. But the answer is not always black or white. Before builders start marketing technology as “mortgage-able,” they should understand all the angles.

The Appraiser

“Anything the builder offers can be financed into the acquisition costs of the home as long as the total acquisition costs do not exceed the appraised value of the home,” says Karla Dennis, CEO of Cohesive Tax, a real estate tax consultancy in Cypress, Calif. “Appraisers will allow for add-ons that increase value. This is a win-win for a new buyer, who's able to get a lot of upgrades financed into their home with minimal out-of-pocket costs.”

But the rules governing what appraisers are willing to factor into their calculations— and what lenders are willing to pay out—vary, warns David Kaiserman, senior vice president for Lennar Financial Services in Miami. Today's tightening mortgage market raises the bar even higher.

“Generally what you can and can't include in a mortgage is often limited by local appraisal practices,” Kaiserman says.

As a rule, experts say, the easier it is for the homeowner to walk away with the item if he or she defaults on the loan, the less likely it is that an appraiser will factor it into the value of the home. If the improvement meets the legal definition of a fixture, something physically attached to the house, it can be considered as part of the house's overall value, says Kaiserman.