Renovation Loans, Buy And Repair or Renovate With One Mortgage

Renovation loans let you roll repairs, upgrades, additions, and ADUs into a single mortgage. Instead of needing cash for the work, you finance a project budget based on what the home will look like after the remodel is finished.

Fast facts

• Minimum credit score: Same minimum credit score requirements as the underlying FHA, conventional, or VA program we use.
• Typical down payment: Same minimum down payment as the base program. Often 3.5 percent down on FHA, 3 percent down on conventional, and 0 percent down on VA when you qualify.
• Property types: Primarily 1 to 4 unit primary residences, with some options for second homes and rentals on the conventional side. Great for additions, ADUs, and major remodels.
• Manufactured homes: Generally allowed, but the rules are different by program, so this is very case by case.
• Rate types and terms: Usually a 30 year fixed, with some flexibility for different terms if that fits your plan.

Best fit for you if

• You want to buy a house that needs more work than a standard standalone loan will allow.
• You own a home, and want to do a large renovation or addition but don’t have enough equity for a cash out or HELOC
• You want to buy a house that is currently not financeable and turn it into a great home.
• You want to get a good deal by buying something that needs work instead of something already perfect.

Big perks

• Uses the as completed value, not the current value.
• If you do not have much current equity but want to expand the size of your house, add an ADU, or do a major remodel, using the future finished value is what makes it possible.
• Can cover everything from repairs to full remodels and additions, and works for purchases or refinances on your current home.

Keep in mind

• You work with a licensed contractor and submit bids as part of the process.
• Funds for the work are controlled and released as the project is completed.
• There are more moving parts than a simple purchase, so having an experienced team matters.