Renovation Loan Resources

A couple who took their renovation mortgage loan to finance their home renovations

Renovation Loan Process

You’ve found your dream home, but it needs a little work. If your heart is set on a fixer-upper but you don’t have the funds to cover both a down payment and improvements, a renovation loan may be the answer. One loan does it all!

1

Step One

Within the first 14 days after submitting your application, we’ll work closely to obtain all documentation, ensure everything is complete and accurate, and submit the application to loan processing for review.
 
During this time, you should have your Housing and Urban Development (HUD) consultant inspection (if applicable) and obtain estimates for the work you’re including in your renovation loan. We need one estimate from each contractor, and you can work with up to three separate contractors, such as a plumber, carpenter, and electrician.
 

2

Step Two

The loan processor will start reviewing your documentation within 24 hours and complete the review within 2 days of receipt. The processor will then submit your loan to underwriting.
 
At this time, you’ll need your final contractor estimate(s) and HUD consultant report (if applicable). Once we receive these items, we will order your appraisal, and finalize your loan amount and monthly principal and interest payment.
 
Once the final bid is placed, we begin working with your contractor(s) on their validation package. This includes license (if applicable), insurance, and reference information. When the contractor package is complete, we will send it for your review and signature.
 

3

Step Three

The underwriter will complete an initial review within 24 hours. The underwriter will also review your appraisal to determine if any additional repairs need to be added to your renovation project.
 
Our contractor validation team will review the contractor’s license, insurance, and references.
 
If any conditions (missing or additional items or information) are required, your loan will be sent back to the processor to clear them and prepare for closing. Once complete, the loan will return to underwriting for final review and approval.
 

4

Step Four

The underwriter will issue a clear to close (CTC) and advise the processor, who will inform all parties of the CTC, verify the closing date and time, and place the loan in the closing queue. The closer will have 24 hours to provide closing documentation to the settlement agent.
 

5

Step Five

You’ll attend the closing and sign the final documents. Congratulations! You’re ready to renovate.
 

Renovation Checklist

While you’re picturing new appliances, sparkling granite countertops, and fresh paint colors, the appraiser who evaluates your new home is inspecting specific items to ensure they meet HUD’s minimum property standards. Follow this checklist ahead of time to determine if these items need to be included in your repair list.
 

  • Exposed wiring
  • Chipped/peeling paint
  • Mold or mildew
  • Termite treatment
  • Windows open/close freely
  • Missing window screens
  • Inadequate caulking or weather-stripping
  • Missing electrical switches, outlets, or plates
  • Missing/damaged flooring or tiles
  • Missing built-in appliances
  • Missing bathroom fixtures
  • Water damage/water or dampness in basement
  • Missing handrails on staircases with 3 or more steps
  • Remaining life of roof
  • Missing gutters
  • Soffit/fascia/siding damage
  • Utilities operational
  • Well/septic damage
  • Water heater (relief valve and proper strapping)

Find a Loan

I want a low down payment and the greatest flexibility.

A Fannie Mae HomeStyle® loan may be your best choice. The down payments is as low as 3% if you’re a first-time homebuyer, 5% for all other borrowers. You can:

  • Borrow renovation funds up to 75% of the after-improved property value.
  • Fund small updates and major remodels.
  • Use the loan for a 1-4 unit owner-occupied property, second home, or single-unit investment property.

I’m only making minor repairs.

An FHA 203(k) Limited loan allows you to borrow up to $35,000 for minor, non-structural renovation projects, including:

  • Roof
  • Gutters
  • Downspouts
  • Existing HVAC systems
  • Plumbing and electrical systems
  • Flooring
  • Painting
  • Weatherization (insulation, storm doors, windows, weather stripping)
This loan is for 1-4-unit owner-occupied properties only, and down payments are as low as 3.5%. The loan amount is subject to FHA loan limits.
 

I want to make major renovations.

An FHA 203(k) Standard loan requires a minimum of $5,000 in repairs with no maximum cost (the loan amount is subject to FHA loan limits). It requires a HUD consultant to inspect the property, consult on the repairs and costs, manage the project, and provide a work write-up. Renovations can include minor repairs and major structural and reconstruction projects, including:

  • Upgrading garages, bathrooms, and kitchens (including new appliances)
  • Removal of health and safety hazards
  • Landscaping and other aesthetic improvements
  • Installation of wells or septic systems
  • Handicapped accessibility alterations
 
This loan is for 1-4 unit owner-occupied properties only, and down payments are as low as 3.5%.
 

I’m a veteran.

A VA Renovation loan offers great benefits to qualified veterans, military members, and their families.

  • No down payment or mortgage insurance.
  • The seller can contribute up to 4% of the sale price toward closing costs (more for certain property types).
  • Fund up to $35,000 in renovations (capped at 25% of the after-improved value; includes contingency reserve, permit fees, inspection fees, title updates, and supplemental origination fee). 

Pages from our renovation loan guide with tips on financing a home renovation with a rehab loan

Learn More About Renovation

Our free renovation guide provides information you need to understand different financing options and requirements.
 

DOWNLOAD RENOVATION GUIDE