RENOVATION LOANS

An FHA 203(k) Renovation Loan is a special type of mortgage that helps homebuyers or homeowners finance both the purchase (or refinance) of a home and the cost of repairs or renovations, all in one loan. It’s backed by the Federal Housing Administration (FHA), which means it’s designed to be accessible, especially for buyers with lower down payments or less-than-perfect credit.

How It Works

Traditionally, if you wanted to buy a fixer-upper or make major improvements to your current home, you’d need to get a separate loan or pay for renovations out of pocket. With an FHA 203(k), those costs are rolled right into your mortgage. That means you only have one loan, one monthly payment, and one closing, which makes things much simpler and more affordable.

What Can You Use It For?

The FHA 203(k) loan can be used for a wide range of improvements, including:

• Roof repairs or replacement
• Kitchen and bathroom remodels
• New flooring or carpet
• Energy efficiency upgrades
• Plumbing or electrical work
• Room additions or structural changes
• Even landscaping and accessibility improvements
   

There are two types of 203(k) loans:
Standard 203(k) – for major projects or structural work
Limited 203(k) – for smaller, non-structural updates (typically under $35,000).

Who Is It For?

This loan is a great option for:

• Buyers who want to purchase a home that needs work but don’t have cash for renovations upfront
• Current homeowners looking to refinance and improve their existing home
• Anyone who wants to turn a less-than-perfect property into their dream home
   

Why Consider It?

The biggest benefit of an FHA 203(k) loan is flexibility. It gives you the power to renovate a home to fit your needs, whether you're fixing up an older house or updating your current one. Plus, because it’s FHA-backed, the loan comes with more flexible credit and income requirements than many conventional renovation loans.

The HomeStyle Renovation Loan is a conventional mortgage offered by Fannie Mae that allows you to finance both the purchase (or refinance) of a home and the cost of renovations, all in one convenient loan. Unlike some other renovation loans, HomeStyle offers more flexibility in the types of properties and improvements it covers, and it’s available to both owner-occupants and investors.

How It Works

With a HomeStyle loan, you don’t need to take out a second loan or pay out-of-pocket for major home upgrades. The cost of your renovations is rolled into your mortgage, so you end up with one loan, one monthly payment, and one closing, which saves time, money, and stress. The amount you can borrow is based on the after-renovation value of the home, not just what it’s worth now. That means you can buy a fixer-upper or improve your current home and finance it based on its future potential.

What Can You Use It For?

The HomeStyle Renovation Loan can be used for almost any kind of improvement that adds value to the home, including:

• Kitchen and bathroom remodels
• Room additions or garage conversions
• New roofing, windows, or flooring
• HVAC, plumbing, or electrical upgrades
• Landscaping, pools, patios, or fencing
• Luxury upgrades like built-in appliances or smart home systems

You can even use it for DIY projects (with some restrictions), and unlike FHA loans, there are no restrictions against luxury features.

Who Is It For?

HomeStyle is a great choice for:

• Buyers who want to purchase and renovate a home with one loan
• Current homeowners looking to refinance and fund home improvements
• Real estate investors buying 1-unit investment properties
• Second home buyers looking to fix up a vacation property

It’s available for primary residences, second homes, and investment properties, offering more flexibility than many government-backed options.

Why Consider It?

The HomeStyle Renovation Loan is ideal for those with good credit who want more options when it comes to property types and improvements. Because it’s a conventional loan, it may come with lower mortgage insurance costs and fewer restrictions compared to FHA renovation loans. Plus, it allows you to increase your home’s value and customize it to your needs. all with one streamlined loan process.