Renovation Loans

What is a Renovation Loan?

A renovation purchase loan or renovation refinance loan (both of which are sometimes referred to as “renovation mortgages”) can help you pay for repairs, remodeling or renovation needed to upgrade your home. On top of serving as your regular mortgage, they provide additional funds for home renovations, all rolled into one simple monthly payment.

Understanding Renovation Loans

Fund Repairs With an Easy Monthly Payment

Home renovation is an exciting journey that allows homeowners to enhance their living spaces, improve property value, and create the dream home they’ve always envisioned. Whether you're buying a fixer-upper or upgrading your current residence, understanding renovation financing is key to a successful transformation. With the right mortgage solutions, you can secure funds to cover essential repairs, luxury upgrades, and structural improvements.

Does This Sound Like You?

• You’re in the market for a home, and you’ve found a home in the right neighborhood and at the right price, but it doesn’t have as many bedrooms as you need, or the electrical wiring is outdated.
• You've been living in your home for several years, and now that your family has grown, you need more space, or perhaps you’d really like to update your kitchen or put in a pool.

Why Choose a Renovation Loan?

Traditional home loans often do not cover renovation costs, leaving homeowners to seek alternative financing options. A renovation loan allows you to borrow based on the post-renovation value of your property rather than just its current worth. This means you can roll both purchase and renovation costs into a single mortgage, reducing upfront expenses and eliminating the need for separate loans.

Key Benefits of Renovation Loans

• Increased Borrowing Power: Finance up to 110% of your home's future value after renovations, when applicable.
• Lower Closing Costs: One mortgage may mean fewer fees compared to taking out multiple loans.
• Flexible Loan Options: Choose between fixed-rate and adjustable-rate mortgage plans.
• Broad Property Eligibility: Available for single-family homes, 2-4 unit properties, condos, co-ops and modular homes.
• Accessible Credit Requirements: Financing may be available for those with less-than-perfect credit.

How Does a Renovation Loan Work?

We determine your total available loan funds by calculating your home’s after-improvement value. With the help of a professional appraiser and the contractor’s Scope of Work, we’ll make an evaluation of how much the renovations could cost.

What Does a Renovation Loan Cover?

Renovation loans may cover these items and more:

• Replacement of electrical, HVAC and plumbing systems
• Adding or expanding bedrooms or bathrooms
• Increasing a home’s energy efficiency with insulation and/or new windows
• Adding access for people with disabilities, such as via wheelchair ramps
• Eliminating hazardous substances such as lead-based paint or mold
• Remodeling and luxury items such as swimming pools

FHA 203(k) Rehabilitation Loan

An FHA 203(k) Rehabilitation Loan enables you to buy or refinance a home in need of repairs, providing extra funds to cover a wide range of renovation and improvement costs. It’s a great choice for first-time homebuyers or those with lower credit scores.

You can choose between a limited or a standard 203(k) loan, depending on your needs:

• If your planned repairs are non-structural and won’t cost more than $75,000, you may qualify for a Limited 203(k) loan. Oftentimes these loans close faster than full loans.
• If you are addressing major repairs, including structural and/or foundation problems, you may want a Full FHA 203(k) loan. These loans require a consultation with a Housing and Urban Development (HUD) Consultant.

Both loans are provided as 30-year, fixed-rate loans. Benefits include:

• Lower down payment requirements (as low as 3.5%).
• Government-backed security, making it easier to qualify.
• Ideal for primary residences but not available for second homes or investment properties.
• Includes mandatory project supervision, ensuring contractor reliability.

VA Renovation Loan

Serving those who have served is at the core of who we are as a company. Veterans and Active Military may qualify for a VA Renovation loan, allowing the purchase/refinance and renovation costs of a fixer-upper home all in one monthly payment.

Key benefits of a VA renovation loan:

• Low-to-no down payment and low closing costs.
• Get up to $50,000 for repairs and minor remodeling.
• We issue renovation funds directly to your contractor for you.

HomeStyle® Renovation Mortgage

A HomeStyle® Renovation Mortgage is a conventional loan option for both purchases and refinances that could enable you to finance one or more major renovation projects. It’s ideal for major renovations, structural repairs, and aesthetic upgrades.

Advantages of a HomeStyle® Renovation Loan:

• Covers a wide range of projects, from kitchen remodels to structural changes.
• Available for primary residences, second homes, and investment properties.

CHOICERenovation® Mortgage

Similar to a HomeStyle® Renovation Mortgage, the CHOICERenovation® Mortgage is a conventional loan for refinances and purchases designed to help you finance a fixer-upper project.

Perks of a CHOICERenovation® Loan:

• Covers a wide range of projects, from kitchen remodels to structural changes.
• Available for primary residences, second homes, and investment properties.

HomeStyle® is a registered trademark of the Federal National Mortgage Association. CHOICERenovation®is a registered trademark of the Federal Home Loan Mortgage Corporation. None of the above-mentioned companies are affiliated with Newrez LLC.