Renovation Loans

What are Renovation Loans & How does the Process Work?
Watch Our Renovation Video to Learn More

Our Renovation Loan Rates are Low & Our Process is Quick & Painless

A renovation loan is ideal for buyers who want to purchase a fixer upper and make repairs or homeowners that want to upgrade or renovate their existing home.

Here’s how it works: Let’s say you want to buy a home that needs a brand-new bathroom and kitchen. A Renovation lender would then give you the money to buy (or refinance) the house plus the money to do the necessary renovations to the kitchen and bathroom.

Often the loan will also include: 1) a contingency reserve so that you will have the funds to complete the remodel in the event it ends up costing more than the estimates suggested and/or 2) a provision that gives you up to about six months of mortgage payments so you can live elsewhere while you’re remodeling, but still pay the mortgage payments on the new home.

We’re here to make the Renovation home loan process a whole lot easier, with tools and expertise that will help guide you along the way, starting with our FREE Renovation Loan Qualifier.

We’ll help you clearly see differences between loan programs, allowing you to choose the right one for you.

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The Renovation Loan Process

Complete our simple Renovation Loan Qualifier
Receive options based on your unique criteria and scenario
Compare mortgage interest rates and terms
Choose the offer that best fits your needs

Check out our Renovation Loan Step-by-step Quick guide for more information! light green divider _ehl-1

Our Renovation Loans

FHA 203K

Enables home buyers and homeowners to finance both the purchase (or refinancing) of a house and the cost of its rehabilitation through a single mortgage or to finance the rehabilitation of their existing home.

Available to both buyers and refinancing households, the 203k loan combines the traditional "home improvement" loan with a standard FHA mortgage, allowing mortgage borrowers to borrow their costs of construction. The 203K comes in 2 varieties.

Limited

Great for less extensive projects and costs are limited to $35,000.

Standard 203K

Meant for projects requiring structural changes to the home including moving walls. Replacing plumbing or anything else which may prohibit you from living in a home while construction is underway.

Learn more about the FHA 203K Loans here.

HomeStyle

You can use a HomeStyle Renovation Loan to cover costs of repairs, remodels, renovations or energy-efficient improvements on a primary residence, a second home or an investment property.

There are no required improvements or restrictions on the types of repairs allowed or a minimum dollar amount for the repairs. However, repairs or improvements must be permanently affixed to the real property, add value to the property, and be completed by a licensed contractor.

Learn more about the HomeStyle Renovation Loan here.

Cash-Out Refinance

You may also want to consider a Cash-Out Refinance for your Renovation Needs. Why? Learn more here.

What Kinds of Improvements Can Be Made with a Renovation Loan?

Understanding your potential return on investment is critical before starting a new renovation project. The simple reality is that few projects instantly increase the value of your home in proportion to their cost, but many projects can lead to increased values and high returns on investment over a period of just a few years.

Remember, most of the work needed in a home will fall under one of two categories Required Repairs or Optional Repairs. Take a look at some of the renovation projects below. Learn more about it in our EHL Renovation Video.

REQUIRED REPAIRS
Renovations can be required repairs that bring a property up to minimum standards, comply with city or county codes, or satisfy appraisal requirements. Below are examples of required repairs:

Replace roof
Upgrade electrical
Plumbing repairs
Repair termite damage
Mold remediation
Interior or exterior paint
Ventilate attic and crawl space areas
Install smoke detectors
Foundation Repair

OPTIONAL REPAIRS
Renovations can also be optional repairs that will modernize, improve or upgrade a property. Below are examples of optional repairs:

Room addition
Kitchen update
Bathroom remodel
Repainting inside/outside
New Siding
Energy-efficient improvements
New flooring
Landscaping (not available for all loan programs)
Making a home accessible to the elderly or disabled

Take a look at our infographic to learn what projects can (and can't) be used with a Renovation Mortgage. Click here!

Hiring a General Contractor is Key!
Especially with Large Renovations

It’s important to do your homework. Scout out neighboring projects and google their contractors. Look at reviews and find out who knows all the latest zoning areas. Does he/she have a license in your area and do they have the appropriate liability and worker’s compensation insurance (for subcontractors)? Most importantly, make sure your contractor isn’t working on 1,000 other projects.

When working with a general contractor, you’ll be outsourcing work to other vendors or contractors that may not be from the same company as your general contractor. Here are a few types of contractors you may need to research:

Tile installer
Cabinet company
Counter top fabricator
Electrician
Plumber
Painter
Drywall installation or wall texturing

EMERALD GEM3 EHL TIP! Ask for recommendations from people in your area for contractors they have used for home renos in the past.

EHL can help assist in finding a contractor and answer any of your questions (833) EHL-1234.

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Who's Involved in the Renovation Process?

APPRAISERS

Determine the current market value of the home for sale. The appraiser will usually review at least three similar homes recently sold in the area, comparing their square footage, the number of bedrooms and baths, age, improvements, location, and condition. This provides a clear picture of the home’s current market value and its value after it’s renovated. Your purchase price, plus any improvement costs, should be equal to (or less than) the selling price of those comparable homes.

CONTRACTORS

They actually will be performing the work are invaluable to the entire renovation project. On the next page, you will find tips about how to find and select a contractor, as well as important questions to ask about their work. You also will find information about city codes and permits.

THE HUD 203k CONSULTANT

Will conduct a site visit and feasibility analysis to determine minimum standards needed to be repaired as well as to understand the homebuyers/owners desired repairs. A good consultant will have knowledge of property values and repairs that can contribute to improving the property’s value and your potential equity in the property.

THE STRUCTURAL ENGINEER

Conducts a site visit to determine if the home is structurally sound to support the renovations. He/She will also look at the work from the repairs/renovations being made.

Just as contractors can make the renovation process smoother, so can your EHL loan officer. As one of the nation’s leaders in renovation financing, we’re here to guide you through your renovation options and provide straightforward answers to your questions.

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Home Renovation Resources

Handy Resources to Take with You!

Kitchen Remodel Checklist: Our free checklist will help provide a basic road map to help you think ahead toward your upcoming kitchen project

Bathroom Remodel Checklist: To help you get organized and prepared as possible, we've developed a free checklist to help you plan your bathroom remodel!

Paint Project Checklist: EHL's Paint project checklist arms you with all the tools and tricks you need to get a professional-looking finish!

Renovation Loan Step-By-Step Quick Guide: Download our printable step-by-step guide which outlines everything you need to know about renovation financing from start to finish.

What are the Features & Benefits of Renovation Loans?

Making significant home improvements such as adding an extra room or replacing the roof not only makes a difference in how much you enjoy your home, but it can improve its overall value as well.

If you aren’t happy with some aging features of your house, or want to buy a home that needs work, consider using a home renovation loan to transform a house into the home you’ve always dreamed of.

Although you may be able to pay for home improvements with a personal loan or other types of financing, these methods have higher interest rates and monthly payments.

The main benefit of renovation loans is that they give you the ability to buy a home in need of repairs and finance those repairs as part of the mortgage. They also have low down payment requirements and great rates.

Fixed Rates
Adjustable Rates (ARM)
Minimal Down Payments
Terms from 5 to 30 Years

Have Questions? Fill Out the Form Below:

Is A Home Renovation Right for You?

Have you been thinking about buying a home that needs some work and
turning it into the home you’ve always wanted? Perhaps you’re currently
living in a home that you absolutely love, but it’s been a while since you’ve
upgraded or remodeled. Whatever the case may be, it’s a smart idea to
renovate if you plan to settle in for the long haul.

Before deciding, ask yourself a few questions:

Is your home your heart?
Can you budget realistically?
Do you need more room or more rooms?
Will moving be enough?
How long will your renovation take?
Will you earn back the upfront costs?
Would you be 'over-improving'?

Learn more by downloading our FREE Home Renovation Guide here.

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How to: Budget for Your Home Reno

Setting a budget and opening up a bank account are two very important aspects of a home renovation. Why? It allows you to see what will fit within your budget.

Make sure you include these into your budget:

Contractor Fees
Materials
Inspection Fees
Truck or Trailer Rentals for Hauling
Tool Rentals

It’s helpful to sit down and go room to room to write down EVERYTHING that is needed, including wall outlets, light switch covers, and door hardware. Don’t forget the larger items like lighting and plumbing fixtures.

EHL TIP! Usually, the contractor will be responsible for any building materials, but you’ll want to make sure you understand what you’re responsible for buying before making your budget. Make sure to look into high-yield savings accounts to let your money grow during the process of planning. Hang onto your receipts! Many home renovation updates can be used as tax deductions. (speak to your accountant)

Interview Contractors & Get Quotes
How to find the right fit:

Once you have a potential list of contractors, interview them and obtain rough quotes for each of the jobs. Remember this will be someone you have to work closely with and if your personalities clash it could turn sour. So, if you have a bad feeling, trust that and move on to someone else on your list. Be sure to get proof of the following from your contractor of choice:

Contractor’s license
Certificate of insurance for general liability and worker’s comp
Lien history and bond number and certification

EMERALD GEM3 EHL TIP! It’s always helpful to get at least two quotes to see how drastic the variation in pricing may be from company to company. After reviewing two quotes, if you find there is a large gap between them, consider getting a third quote to figure out what a median standard might be. Remember, EHL can assist you in finding a contractor! We can also assist in various parts of the transaction along the way. We are always here to answer your questions! (833) EHL-1234

Obtain an airtight contract. You will want to obtain a contract that includes: payment schedule (make sure you never complete final payment until you are 100% satisfied), timeline, potential penalties for missed milestones and details on all the work. Having this document will protect you in the end.

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Who is Responsible for What... During Your Home Renovation?

LENDER

Examines bids and work plan; review with borrower and contractor
Ensures work meets program requirements and costs of repairs are reasonable/customary
Assures all required permits are obtained
Completes the HUD-92700, MMW (Maximum Mortgage Worksheet) when applicable
Determines contingency reserve percentage
Selects 203k HUD consultant (when applicable)

BORROWER

Selects contractor/bids and submits to lender
Obtains necessary permits, if not obtained by the contractor
Signs homeowner/contractor agreement

CONTRACTOR

Meets all jurisdictional licensing and bonding requirements
Provides written cost estimate along with licensing and bonding
Executes homeowner/contractor agreement
Obtains permits, if homeowner has not

APPRAISER

Receives all cost estimates and list of work items
Provides an after-improved value
Performs final inspection to ensure work is completed as submitted