Renovation Loan

A Renovation Loan is a mortgage that allows a homebuyer to finance the purchase of a home and the cost of repairs or upgrades in the same loan.

Instead of buying a home and then paying cash for repairs, the renovation costs are added to the mortgage.

1. Buyer finds a fixer-upper home
    
2. Contractor provides repair estimates
    
3. The lender approves a loan that includes:
    
   • Purchase price 
   • Renovation costs
      

1. Funds for repairs are placed in an escrow account
    
2. The lender releases funds as the work is completed.
    

Purchase price: $500,000
Renovation cost: $100,000

Total loan amount: $600,000

The buyer finances both the home and repairs together.

• Down payment as low as 3.5% 
• Designed for primary residences 
• Popular for first-time buyers
   

• Conventional loan 
• Can be used for larger renovations 
• Works for primary, second homes, or investment properties
   

• Available to eligible veterans 
• Can finance repairs and improvements.
   

Renovation loans can cover:

• Kitchen remodels 
• Bathroom upgrades 
• Roof replacement 
• Flooring 
• Structural repairs 
• HVAC systems 
• Room additions
   

✔ Buy homes below market value
✔ Finance improvements into the mortgage
✔ Increase home equity after renovation
✔ Helps buyers compete in tight housing markets.

Home price: $650,000 fixer-upper
Repair budget: $80,000

Loan amount: $730,000

After renovation, the home might be worth $800,000+.