According to CNBC, renovations that improve curb appeal — like garage door replacements, wood deck additions, and veneer installations — are paying homeowners back 18% higher than last year
Home Improvements Could Grow Your Property Value and Make Your House Easier to Sell
20% of REALTORS say a kitchen upgrade helped close a home sale, according to the 2019 Remodeling Impact Report
Consumer Reports notes that making needed or wanted repairs and improvements can save you money on homeowners insurance
What's a Renovation Loan?
Also sometimes referred to as a Rehab Loan, an FHA loan allows you to finance not just the purchase of a home, but wanted or needed repairs and improvements.
This type of loan is ideal for current or new-to-you homes that need major TLC, but aren’t eligible for standard mortgage loans. Because your lender keeps track of the repairs you do, you can get a loan approved for a home that wouldn’t otherwise be eligible.
With a single loan, you can buy a fixer-upper AND fix it up. Or renovate your current home to get more enjoyment out of living there!
2 Ways to Use Your Renovation Loan
Buy a Fixer-Upper (and Fix It Up)
Or... Renovate Your Current Home!
Nick Smith is the best Loan Officer! He made the process 100% stress free! If you are looking for a Loan Officer look no further than Nick Smith at Fairway Mortgage! He will take great care of you and your family. I am now in my forever home thanks to Nick and his amazing Assistant Alexis.- Katherine S.
We had a great experience with Nick and his team. Nick was able to close on our house a week before the date he originally gave us, which was extremely fast and helped us so much. Kaylee was on top of everything and so helpful.- Shalane H.
Nick and his team were always on top of things, they kept us in the loop, and were quick to respond to our questions. They made the loan process easy and I plan on recommending them to everyone I know who might start looking for a loan.- Odgen M.
Nick is an exceptional communicator. He cares about you and not just the deal, which is a rare quality these days. He in knowledgeable and walks you through every step of the process with outstanding follow up to numerous questions. He went above and beyond to make sure our experience was perfect- Wendy J.
Nick is an absolute superstar, is honest, up front, and works harder than any other lender I've worked with in the past 2 years. His communication is fantastic and he consistently beats out others lenders interest rates, fees, and closing costs. He's skilled to confidently navigate any difficult circumstances that may come up which is the priceless value of his 15+ years of experience. As an agent, I couldn't been more comfortable that my Buyer's are in the best of hands working with Nick.- Danielle H.
Your Renovation Wish List Could Include...
Increase window size
Bring in more natural light
Finish a basement or attic
Create a mother-in-law apartment or guest space
Correct foundational issues
Protect your investment for the long-term
Add a detached garage when one does not exist
There’s room for everyone
Knock down walls
Open up the floor plan to create versatile, welcoming spaces
Flood-proof your property
Add a retaining wall to prevent expensive damage
Repair the pool
Tired of leaks and cracks? Fix the pool & start enjoying it
Expand or refresh the kitchen
Cooking is just more fun in an updated kitchen
Add square footage
Growing your family? Grow your home alongside it!
How Does a Renovation Loan Work?
Depending on the types of repairs you plan to do, you have two options when it comes to securing a FHA Renovation Loan: Limited and Standard.
The Limited loan
The Limited loan is for non-structural or “cosmetic” repairs. It covers up to $35,000 in renovation costs. With a Limited loan, you can do nearly anything that doesn’t affect the home’s structure! Think kitchen and bathroom remodels, carpet and flooring replacement, painting, appliance replacement, and much more.
The Standard loan
The Standard loan is a loan for projects with repair costs over $35,000. It can be used for structural or non-structural repairs. With a Standard Loan, you have even more flexibility. You can expand the home’s footprint, improve accessibility for differently abled people, and even move the home to a different site.
Thinking About a Renovation Loan?
You Might Be Wondering...
Can I do the work myself?
No. Renovation loans require a licensed contractor to complete the work.
Is there a maximum dollar amount for repairs?
There is no maximum repair amount. However, your loan amount will be determined by several factors, including the FHA County and conforming loan limits.
What if we can’t live in our fixer-upper while we renovate? Would I need to start making mortgage payments right away?
The short answer is: No! With the Renovation Loan, you can finance up to six months of mortgage payments into your loan, provided that determines that the home is uninhabitable. This would eliminate the need for you to make two housing payments at once.
When and how does my contractor get paid for the work?
With the Standard loan, no funds are given to the contractor in advance. Draws to the contractor are made as work progresses and phases are completed. Draw inspections will verify that the work has been completed. Up to five draws can be taken.