Renovation Loans
Buy the house nobody else wants, and fix it with the same loan.
The kitchen is forty years old, the listing has sat for ninety days, and every buyer who walked through it did the same arithmetic and left. A renovation loan finances the purchase and the work together, and it appraises the house on what it will be worth when the work is done — not on what it looks like on the day you see it. There are seven of these programs, they differ in ways that decide files, and the differences are not the ones most people expect.
Who this is built for
Buyers priced out of the finished version
The renovated house on the next street is well past your budget. The tired one is not. This is the loan that gets you from the second to the first without needing the cash in between.
Anyone who has lost a house to its condition
A property that will not pass an ordinary appraisal — peeling paint, a failed roof, no working kitchen — is not a dead file. It is a file for a different program, and there are seven of them.
Owners who want to renovate what they already have
Most of these programs refinance as well as purchase, so the equity and the work can be handled in one transaction rather than a loan followed by a credit card.
Buyers of a second home or a rental
Two of the seven reach past a primary residence. If you are renovating something you will not live in, that narrows the list immediately — and it is worth knowing before you fall for a listing.
Send the listing and a rough idea of the work. Which of the seven programs fits is usually decided by two questions — whether the work is structural, and whether you will live there — and both can be answered in one conversation.
Talk it through“Limited” does not mean “smaller”
The Limited versions do not just lower the cap — they bar structural work entirely. Moving one wall moves you to a different program.
Three facts from the current program comparison that change how people plan:
The routing question is almost never “which has the best rate”. It is: is the work structural, is there a pool in it, will you live there, and are you buying or refinancing. Four answers narrow seven programs to one or two, usually in the first ten minutes.
| Part of your budget is held back deliberately | A contingency reserve, from 10% | Every program here holds a reserve against what is behind the walls — rising to 15% where utilities are off or there is mold, fire or water damage. It is part of the budget, not a fee. |
| “Limited” is a scope rule, not a size rule | No structural work at all | 203(k) Limited and USDA Limited bar structural work outright. The cap is the smaller difference; the scope is the one that reroutes files. |
| Only two of the seven leave a primary residence | HomeStyle and CHOICERenovation | If you are renovating a second home or a rental, the conventional pair is your entire list — and that is worth knowing before you write an offer. |
Program parameters reflect one lender’s current renovation comparison and per-program guidelines, revised 08/21/2026, and change without notice. Agency requirements apply and are determined per file. Not all applicants or properties will qualify.
How it actually works
The mechanic is the same across all seven, and it is genuinely different from an ordinary mortgage.
The appraisal looks forward, not back
The property is valued on what it will be worth once the work described in your plans is finished. That single difference is what makes a house nobody else can finance financeable.
The purchase and the work are one loan
One application, one closing, one payment. The repair money does not come to you at the closing table — it goes into an account and is released as the work is completed.
The money comes out in draws
Between two and five releases depending on the program, against inspections. Some programs let you draw for materials before the work is done; several do not, and that changes how a contractor has to be paid.
A contingency reserve is held back on purpose
Every one of these programs holds a reserve against surprises behind the walls. It is part of your budget from day one, not a fee — and if it goes unused it is not lost.
The seven programs, compared
Four tables: what each one finances, what each one lets you build, how the repair money actually works, and a home-equity route that skips the machinery altogether.
One lender’s current renovation comparison, seven programs side by side. Maximum financing is stated against the as-completed value:
| The program | Maximum financing | Who and what it covers |
|---|---|---|
| FHA 203(k) Limited | 96.5% | Primary residence only. The cosmetic lane — no structural work. |
| FHA 203(k) Standard | 96.5% | Primary residence only. Structural work allowed; a HUD consultant is required. |
| Fannie Mae HomeStyle | 95% — 97% for a first-time buyer | Primary residence, second home, or investment property. Can be combined with HomeReady. |
| Freddie Mac CHOICERenovation | 95% — 97% for a first-time buyer | Same reach as HomeStyle. Can be combined with Home Possible. |
| VA Renovation | 100% | Primary residence, for those with VA eligibility. Minor structural work only. |
| USDA Renovation Standard | 100% | Primary residence inside the USDA map. Purchase only. |
| USDA Renovation Limited | 100% | Same map, same purchase-only rule, with a tighter repair cap and no structural work. |
Two of these deserve a second look. The conventional pair — HomeStyle and CHOICERenovation — are the only programs here that will finance a second home or a rental, and on a refinance they require the existing loan to already be owned by the matching agency, which is a real gate worth checking early. The two government 100% programs come with their own front doors: VA needs service eligibility, and USDA needs an address inside its map and a household income under a ceiling. If the address or the income disqualifies you there, FHA’s 203(k) has neither restriction.
Representative of one lender’s renovation program comparison, revised 08/21/2026, and its per-program guidelines. Maximum financing is expressed against the as-completed value and reflects each agency’s program maximum; conventional figures are subject to automated underwriting findings, and the first-time-buyer level requires meeting that agency’s definition. FHA, VA and USDA financing is subject to those agencies’ requirements, applicable county loan limits, and their own fee or premium structures. Not all applicants or properties will qualify.
This is where files get routed, and it is not usually the loan amount that decides it. Three questions settle almost every case:
| The question | Says yes | Says no |
|---|---|---|
| Structural work — moving walls, foundations, an addition | 203(k) Standard · HomeStyle · CHOICERenovation · USDA Standard | 203(k) Limited · USDA Limited. VA Renovation allows minor structural work only. |
| Luxury items — a pool, an outdoor kitchen | HomeStyle · CHOICERenovation · VA Renovation | 203(k) Limited · 203(k) Standard · USDA Standard · USDA Limited |
| A second home or a rental property | HomeStyle · CHOICERenovation, one unit | Every government program here is primary-residence only |
| Refinancing instead of buying | Both 203(k) programs · HomeStyle · CHOICERenovation · VA Renovation | Both USDA renovation programs are purchase-only |
The pool question surprises people, and it is a clean illustration of why the program matters more than the rate: if a pool is part of your plan, the two conventional programs and VA Renovation are your entire list — both FHA and both USDA programs treat it as a luxury item and will not finance it. Both conventional programs also run a simplified version for smaller projects that skips draws and the consultant entirely, and both operate a dedicated lane for pool installations.
Representative of the same lender’s renovation comparison, revised 08/21/2026. Structural, luxury and eligible-improvement definitions follow each agency’s published guidelines and are determined per file. Investment and second-home eligibility on the conventional programs is limited to one-unit properties. Not all applicants or properties will qualify.
The repair budget and the draw schedule are the practical half of a renovation loan — and the half that decides whether a contractor will take the job:
| The program | Repair budget | How the money is released |
|---|---|---|
| FHA 203(k) Limited | No minimum, up to $75,000 including fees and contingency. County loan limits apply. | Two draws — half at closing, half when the work is done. A HUD consultant is allowed but not required. |
| FHA 203(k) Standard | From $5,000 of eligible repairs. County loan limits apply. | Five draws, and materials may be drawn. A HUD consultant is required. |
| Fannie Mae HomeStyle | No minimum. A simplified version caps at $25,000 with no draws and no consultant. | Five draws, and materials may be drawn. |
| Freddie Mac CHOICERenovation | No minimum. The same $25,000 simplified version exists. | Five draws, and materials may be drawn. |
| VA Renovation | No minimum, up to $50,000 including fees and contingency. | Three draws. Materials may not be drawn separately. |
| USDA Renovation Standard | No minimum. | Five draws. Materials may not be drawn separately. |
| USDA Renovation Limited | No minimum, up to $35,000. | Two draws — half at closing, half at completion. |
Add the contingency reserve to every line above: a minimum of ten percent of the repair budget, rising to fifteen percent where the utilities are off or there is evidence of mold, fire or water damage, and as high as twenty percent at the underwriter’s discretion on some programs. Plan the budget with it included rather than discovering it late. One more practical point that decides contractors: the programs that allow a materials draw let a contractor order supplies before finishing, and the ones that do not require them to carry that cost themselves — which is worth raising in the first conversation with whoever will do the work.
Representative of the same lender’s renovation comparison, revised 08/21/2026. Repair maximums include fees and contingency where the source states so. The 203(k) Limited maximum is subject to a lower cap in Qualified Opportunity Zones. FHA and VA repair limits operate alongside applicable county loan limits. Draw counts, materials-draw eligibility and consultant requirements are per program as published in that source. Contingency reserve percentages are set per file by the underwriter. Not all applicants or properties will qualify.
A different lender, and a different idea: rather than a renovation mortgage with draws and inspections, a home-equity line underwritten against the after-renovated value. You pay your contractors straight from the line, with no draw requests at all.
| The file | Maximum financing | Condition |
|---|---|---|
| A line measured against the finished value | 95% of the after-renovated value | From a 640 credit score |
| Loans to $750,000 | 95% | Above 65% combined, the ceiling steps down to $500,000 |
| First or second lien position | 95% | An existing first mortgage does not have to be disturbed |
Where this wins is speed and simplicity: no draw requests, no consultant, and no waiting on an inspection before a contractor gets paid. The trade-offs are real and worth stating. The maximum loan cannot exceed one hundred and twenty-five percent of the property’s current as-is value, which caps ambitious projects on modest houses. It covers primary residences and second homes but not investment property. It runs on one-to-two-unit homes plus a single accessory dwelling unit. The minimum is fifty thousand dollars. A monthly maintenance fee applies until an appraiser certifies the work is complete, and in a declining market the maximum steps down. If your project is smaller than this or you would rather not touch the house’s valuation at all, an ordinary home-equity line does the plain version of the same job.
Representative of one credit union’s renovation home-equity line, matrix effective 07/01/2026. Financing is measured against the after-renovated value; the maximum loan amount may not exceed 125% of the current as-is value. Primary residences and second homes; investment properties are ineligible. One-to-two-unit properties plus a maximum of one accessory dwelling unit. Maximum loan amount is reduced above 65% combined loan-to-value and steps down further in declining markets. Qualifying ratios vary by credit score. A monthly maintenance fee applies until an appraiser’s certificate of completion. Figures do not combine with the other tabs on this page. Rate, margin, index, floor, ceiling and term are not published here. Not all applicants will qualify.
The boundaries that decide these files
What you actually hand over
A scope of work with real numbers
Written by the contractor who will do the job, itemised. This is the document the whole file is built on.
Your contractor’s credentials
License, insurance and — on the programs that ask for it — a track record. The lender is underwriting them nearly as much as you.
The ordinary income and credit file
These are agency loans underneath the renovation machinery, so the income documentation is whatever the underlying program requires.
Plans and permits where the work needs them
Structural work and additions bring the local building department into the file. Better to find that out at the start than at the draw.
Where it wins — and the honest trade-offs
Told straight, because this page is useless otherwise.
Condition is what keeps other buyers away, and condition is exactly what this loan is built to look past. The competition on a tired listing is thinner than on a finished one.
The alternative — buy, then borrow again for the work — means two sets of costs and a second approval at whatever rates exist by then. This settles both at once.
Renovation money inside the mortgage is priced as mortgage money. The usual alternative is a credit card or a contractor’s financing, and the comparison is rarely close.
VA Renovation and both USDA renovation programs finance the whole as-completed value for those who qualify for them — the buy-and-fix version of the richest financing in lending.
A scope of work, a contractor review, sometimes a consultant, and an as-completed appraisal all sit in front of the closing. On a competitive listing that timeline is a real disadvantage and should be planned around rather than discovered.
The lender will vet them, but the choice is yours and it is the single largest variable in whether this goes well. A cheap bid that stalls halfway is the most expensive outcome available.
That is precisely what the contingency reserve exists for — and when it runs out, the remaining cost does not get added to the mortgage later. Build the budget honestly the first time.
The comparison behind this page is a program-level summary. County loan limits, agency overlays and per-file underwriter discretion all sit behind these numbers, so treat them as the shape of the answer rather than a quote.
Send the listing and the scope
Which of the seven fits is usually settled by four questions: is the work structural, is there a pool in it, will you live there, and are you buying or refinancing. Send me the property and a rough scope and you will get a straight answer on which programs are open to you — and which are not, and why.
Questions people actually ask
Open the full Q&A — the consultant, the draws, and what happens when the work costs more ▾
+Can I really buy a house with no working kitchen?
Yes — that is the point of these programs. The appraiser values the property as it will be once your plans are carried out, so a house that fails an ordinary appraisal on condition can still be financed. It is the reason a renovation buyer competes against far fewer people on the same listing.
+What is a HUD consultant, and do I need one?
An independent inspector who writes up the work, checks the cost estimates and signs off the draws. On 203(k) Standard they are required. On 203(k) Limited they are allowed but optional, and the simplified conventional versions do not use one at all. Where they are optional they still tend to be worth it on anything complicated.
+What happens if the work costs more than planned?
That is what the contingency reserve is for — ten percent minimum, fifteen where the utilities are off or there is mold, fire or water damage. Beyond the reserve, overruns are yours to cover and cannot simply be added to the loan afterwards. It is the strongest argument for an itemised bid from a contractor who has seen the property properly.
+Can I do the work myself?
Some programs permit self-help work under specific conditions, and it is much more restricted than people expect — documentation of your ability, and typically no payment for your own labor. Ask before planning around it, because it changes both the paperwork and the timeline.
+Can I use one of these on a rental property?
On two of the seven, yes — HomeStyle and CHOICERenovation both reach investment property on a one-unit home. Every government program here is primary-residence only. If you are buying to renovate and resell rather than to hold, that is business-purpose lending and lives on the bridge and fix-and-flip page instead.
+Which one is cheapest?
The wrong first question, honestly. The programs differ on what they will let you build, where you can live, and whether you can refinance — and those rule out most of the list before price enters it. Once two programs both fit a file, comparing them properly takes about ten minutes with your actual numbers.
+Is there a way to renovate without all the draws and inspections?
Yes — the fourth tab. A home-equity line underwritten against the after-renovated value lets you pay contractors directly with no draw requests. It caps out at one hundred and twenty-five percent of the home’s current as-is value and does not cover investment property, but for a straightforward project it removes most of the machinery.
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Loan programs, explained honestly
The programs described are offered through third-party lenders, are subject to lender approval, agency requirements and underwriting approval, and change without notice. Figures for the seven agency renovation programs are representative of one lender’s renovation program comparison revised 08/21/2026 and its per-program guidelines; the home-equity renovation line is representative of one credit union’s matrix effective 07/01/2026 and its figures do not combine with the others. Maximum financing is expressed against as-completed or after-renovated value as stated in each table and is subject to appraisal, automated underwriting findings, applicable county loan limits and agency program maximums. FHA, VA and USDA programs are subject to those agencies’ eligibility requirements and carry their own fee, premium or guarantee structures; VA requires service eligibility and USDA requires property and household-income eligibility. Repair maximums include fees and contingency where stated. A contingency reserve is required and is set per file. Renovation loans require a documented scope of work and an approved contractor. Mortgages by Guido and MTGCASA are not affiliated with or endorsed by HUD, FHA, VA, USDA, Fannie Mae or Freddie Mac. Not all applicants or properties will qualify. This is not a commitment to lend. Equal Housing Opportunity.