Loan Programs
Renovation Loans
Some houses are worth buying and not currently livable. A renovation loan finances the purchase and the work in one mortgage, based on what the property will be worth when the work is done rather than what it is worth today.
Why This One
What a Renovation Loan Gives You
One loan, one closing
The purchase and the renovation budget are financed together instead of stacking a construction loan or a credit line on top.
Based on after-repair value
Underwriting looks at what the property will be worth once the work is complete.
Low down payment
As little as 3.5 percent on the FHA 203(k) version.
Buys houses others cannot
Properties that will not pass a standard appraisal as-is become financeable.
The Basics
What This Asks For
- FHA credit and down payment standards apply on the 203(k) version
- Primary residence
- Licensed contractor with an approved scope and bid
- Work must fall inside the program's allowed categories
- Funds release in draws as work is completed and inspected
- 30 year terms
The Honest Part
Where This Gets Difficult
This is the most process-heavy loan on the list, and you should go in knowing that. The contractor has to be approved, the scope has to be documented before closing, and the money releases in inspected draws rather than as a lump sum. Changing your mind about the scope mid-project is expensive and slow.
Timelines run longer than a standard purchase. If you are competing against cash offers on a distressed property, that is a real disadvantage.
It also carries FHA mortgage insurance, with the same life-of-loan consideration covered on the FHA page. For many renovation buyers the plan is to refinance into conventional once the work is done and the appraised value reflects it. Worth planning at the start.
The honest summary: when it fits, nothing else does the job. It is not a convenience product.
FAQ
Frequently Asked Questions
Send Us the Property and the Scope
Whether a renovation loan works depends almost entirely on the specific house and the specific work. Send both and we will tell you if it is viable.