Renovation Loans
Finance the purchase and renovation of a property with a single loan — turn a fixer-upper into your ideal home.
Program Overview
Renovation loans allow you to finance both the purchase (or refinance) of a home and the cost of renovations in a single mortgage. Instead of buying a home and then taking out a separate construction loan or personal loan for improvements, renovation financing wraps everything into one loan with one closing. Programs include FHA 203k, Fannie Mae HomeStyle, and Freddie Mac CHOICERenovation.
Who Is This Loan For?
- ✓ Buyers purchasing fixer-upper properties
- ✓ Homeowners refinancing and renovating simultaneously
- ✓ Buyers who want more options in competitive markets (willing to renovate)
- ✓ Investors looking to add value through improvements
Key Benefits
One Loan, One Closing
Purchase price + renovation costs wrapped into a single mortgage.
Based on After-Improved Value
The loan amount is based on what the property will be worth after renovations — not the current as-is value.
Expand Your Options
Properties that need work become viable options, opening up more inventory in your search.
Multiple Programs
FHA 203k, HomeStyle, and CHOICERenovation each have different guidelines to fit various borrowers.
Qualification at a Glance
General Requirements
- Credit score of 620+ for conventional, 580+ for FHA 203k
- Down payment based on combined purchase + renovation amount
- Licensed contractor required for most programs
- Project plans and cost estimates required before closing
- Property appraisal based on after-improved value
Advantages
- ✓ Single loan for purchase + renovation
- ✓ Loan based on future value
- ✓ FHA and conventional options
- ✓ Low down payment possible
- ✓ Wider home search options
Tradeoffs to Consider
- ↔ Licensed contractor typically required
- ↔ More paperwork and inspection requirements
- ↔ Draws and inspections during renovation
- ↔ Project must be completed within specified timeline
- ↔ Not all renovation types are eligible
Common Scenarios
Buyer Renovating Dated Home
A buyer purchases a dated 1970s home for $250K with $75K in planned renovations. An FHA 203k loan finances the full $325K based on the after-improved appraised value.
Documents Typically Needed
- Standard mortgage documentation
- Contractor bids and project plans
- Licensed contractor information
- Property appraisal (as-is and after-improved)
- HUD consultant report (FHA 203k Standard)
Frequently Asked Questions
Limited DIY work is allowed on some programs, but most renovation loan programs require a licensed, insured contractor for significant work. Ask your advisor about specific program rules.
Broker Disclosure: Scout Financial Group Inc DBA Airus Lending is a licensed mortgage broker (NMLS #2187418) and does not make loans or credit decisions. Airus Lending works with multiple wholesale lenders to help borrowers compare available loan options. Final approval depends on the lender, automated underwriting findings, documentation, state requirements, and overall borrower profile. Not all applicants will qualify.