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Residential Loans: Renovation Loans

What is a residential renovation loan?

  • Residential renovation loan programs are specifically designed for borrowers who wish to repair, improve, or upgrade a home they would like to buy or already own.
  • The loan can be in the form of a purchase loan (for borrowers looking to buy a home and then renovate it) or a cash-out refinance (for borrowers who are already current homeowners looking to renovate their homes). 

Sample residential renovation loan programs

There are many renovation loan products to choose from, including:

Fannie Mae HomeStyle renovation mortgage: This is a conventional mortgage that lets borrowers finance improvements, renovations or repairs to a home at the time of purchase or as a refinance transaction.

  • Maximum renovation costs: In most cases, cannot exceed 75% of the as-completed appraised value of the property.
  • Minimum renovation costs: None.
  • Eligible projects: The mortgage can be used for virtually any project.
  • Ineligible projects: There are some limitations; for example, for landscaping costs, the improvements must be permanently affixed to the property.

Federal Housing Administration (FHA) Standard 203(k) rehabilitation mortgage: Like Fannie Mae, the government also offers a mortgage program that allows borrowers to finance certain improvements at the time of purchase or as a refinance transaction. 

  • Maximum renovation costs: None.
  • Minimum renovation costs: $5,000.
  • Eligible projects: The extent of the rehabilitation may range from relatively minor (though exceeding $5,000 in cost) to virtual reconstruction as long as the existing foundation system remains in place. The eligible improvements are diverse and include enhancing accessibility for disabled people and making energy conservation improvements.
  • Ineligible projects: Recreational or luxury improvements (e.g., swimming pools (but an existing pool may be repaired), exterior hot tubs or saunas, barbecue pits, tennis courts, gazebos, etc.) and additions or alterations to support commercial use are not covered by this program.

FHA Limited 203(k) rehabilitation mortgage: Besides its “Standard” program, FHA also offers a more streamlined, “Limited,” version of its rehabilitation mortgage program for minor remodeling and non-structural repairs.

  • Maximum renovation costs: $35,000.
  • Minimum renovation costs: None.
  • Eligible projects: Examples include making energy conservation improvements, creating accessibility for persons with disabilities, installing new kitchen appliances, and installing or repairing exterior decks, patios, and porches, as long as the total costs do not exceed $35,000.
  • Ineligible projects: “Major” projects are ineligible. A project is considered major if, for example, the project is expected to take more than six months to complete or if it will prevent the borrower from occupying the property for more than 15 days.

All items are subject to change. To find out more about these programs and other renovation programs (e.g., Freddie Mac’s renovation program and the U.S. Department of Veterans Affairs (VA) renovation program), call David A. Krebs at 321-239-2781, click here to submit a message, or click here to book a call.

Sample success stories

To see how we’ve helped individuals obtain residential renovation loans, go to our “Success Stories” page and filter by “Residential Renovation Loan”.