Renovation Loans

Renovation Loans typically function as either purchase plus renovation in one loan or as a refinance of the existing mortgage plus renovation costs in one loan.

FHA 203(k) Program is used to:

  • Purchase and Rehabilitate an existing one-to-four unit structure, which will be used primarily for residential purposes. i.e. Purchase + Renovation in ONE loan, ONE close.

  • Rehabilitate and refinance outstanding indebtedness of a structure.

  • Rehabilitate the interior space of an eligible Condominium Unit (excludes areas that are the responsibility of the Condominium Association).

Types of 203(K) Rehabilitation Mortgages:

  • Standard 203(k) may be used for remodeling and repairs. There is a minimum cost of $5,000 and the use of a 203(k) consultant is required. Cost of the rehabilitation must be a minimum of $5,000 and the total value of the property must fall within the FHA mortgage limit for the area. This is determined by either (1) the value of the property before rehabilitation, or (2) 110% of the appraised value of the property after rehabilitation, whichever is less.

  • Limited 203(k) may only be use for minor remodeling and nonstructural repairs. This does not require the use of a 203(k) consultant but one may be used. The total rehabilitation costs must not exceed $35,000. There is no minimum rehabilitation cost.

Standard 203(k) Eligible Activities Include:

  • Converting a one-family structure to a two-, three-, or four-family structure.

  • Decreasing an existing multi-unit structure to a one- to four-family structure.

  • Rehabilitating, improving or constructing a garage.

  • Installing or repairing wells and/or septic systems.

  • Connecting to public water and sewage systems.

  • Repairing/replacing plumbing, heating, A/C and electrical systems.

  • Repairing or adding roofing, gutters and downspouts.

  • Installing or repairing fences, walkways and driveways.

  • Creating accessibility for persons with disabilities.

  • Repairing or removing an in-ground swimming pool. Excludes installing a new pool.

Conditions apply. Please discuss program options with a licensed mortgage professional or review product guidelines at Federal Housing Administration.

Conforming Conventional Renovation Loans

There are a variety of Renovation Loan options available in the Conventional Loan segment most common are:

Fannie Mae:

Freddie Mac:

Conditions apply. Please discuss program options with a license mortgage profession

VA Renovation Loans

The VA Renovation Programs allows borrowers to finance the purchase and rehabilitate in one loan.

  • Full VA Appraisal and Notice of Value (NOV) required.

  • To rehabilitate an existing structure and to refinance the outstanding indebtedness.

  • Cash-out to the borrower at closing is not allowed; however, incidental cash-out at closing not to exceed the lesser of 1% of the loan amount or $2,000 is allowed.

  • At the completion of renovation any unused contingency reserve may be returned to the borrower or applied to the principal balance at the borrower's discretion.

  • Borrower must be an eligible Veteran.

  • DD-214

  • Certificate of Eligibility (COE)

  • Maximum amount of improvements is $50,000 including fees, contingency and all allowable construction related costs.

  • Additional criteria and/or restrictions may apply.

USDA Guaranteed Rural Housing Renovation Loans

The rehabilitation and repair feature of the USDA allows borrowers to finance the cost of repairs to improve an existing dwelling at the time of purchase. The maximum loan amount cannot exceed the cost of acquisition plus the cost of repairs up to the as-improved market value, plus the guarantee fee, if financed. The borrower obtains one loan at a fixed interest rate to finance both the acquisition and the rehabilitation of the property.

  • Available to low- and moderate-income rural residents whose income is equal to or less than 115% of the area median income by enabling access to affordable housing finance options with little or no down payment or out-of-pocket costs.

  • A rural community generally has a population of 10,000 or less; however, a community with a population of 20,000 or less can be considered “rural” if it is located outside a metropolitan statistical area (MSA).

  • To be eligible for RHS assistance, the borrower must lack sufficient resources to qualify for traditional conventional financing.

  • Borrowers must have a valid Social Security number.

  • Title must be placed in individual names only

  • Borrowers must not be delinquent on a federal loan.

  • Maximum of four borrowers allowed on a single transaction.

  • First-time Home Buyer

  • Additional criteria and/or restrictions may apply.


Product guidelines are determined by the the corresponding Government-Sponsored Enterprise (GSEs) such as Fannie Mae, Freddie Mac, FHA, etc. and are subject to change. Lenders and investors may have their own additional requirements/conditions called overlays. Not all programs are available in all areas. This is for informational purposes. Discuss your loan needs with a licensed mortgage professional.