Question 1

How does a renovation loan work?

Accepted Answer

You finance the purchase price plus the cost of renovations in a single loan. The lender appraises the home based on its after-renovation value. One closing, one payment.

Question 2

What renovations can be financed?

Accepted Answer

Almost anything — kitchen and bath remodels, new roofing, HVAC, structural repairs, additions, and even energy-efficient upgrades. Luxury items like swimming pools may have restrictions.

Question 3

What's the difference between FHA 203(k) and HomeStyle?

Accepted Answer

203(k) is FHA's renovation program with 3.5% down and more flexibility for credit. HomeStyle is the conventional version with 3–5% down, no mortgage insurance once you hit 20% equity, and works for investment properties too.

Question 4

Do I need a contractor for a renovation loan?

Accepted Answer

Yes — for most projects, you'll need a licensed contractor with a written bid. The lender approves the contractor and disburses funds in stages as work is completed.

Question 5

How long do I have to complete renovations?

Accepted Answer

Typically 6 months for a standard 203(k) and up to 12 months for larger projects. The timeline is set up front in your renovation contract.

Question 6

Can I do the work myself?

Accepted Answer

Generally no for FHA 203(k) — work must be done by licensed contractors. HomeStyle allows some DIY for highly skilled borrowers, but most lenders require professional contractors.

Question 7

How is the loan amount calculated?

Accepted Answer

Based on the lower of (purchase price + renovation costs) or the after-repair appraised value. The appraiser values the home as if renovations were already complete.

Question 8

Can I refinance into a renovation loan?

Accepted Answer

Yes — both 203(k) and HomeStyle allow refinances. Great for homeowners who want to renovate without a separate, higher-rate construction loan.

Renovation

Key Features

Common Questions

Related Loan Types

Ready to move forward?