What are Renovation Loans & How does the Process Work?
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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.
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!
Our Renovation Loans
Enables homebuyers 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.
Great for less extensive projects and costs are limited to $35,000.
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.
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.
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.
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
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!