Renovation Loans

The options to fund renovation costs are limited.

  • Deplete your savings to pay out of pocket
  • Use high-interest credit cards
  • Obtain an unsecured personal loan
  • Access existing equity in your home through a cash-out refinance or a home equity line of credit

What if none of those work for you? Finance of America Mortgage has a different solution!

Renovation Loans allow you to borrow money for the purchase or refinance of an existing home PLUS the cost of home improvements – all in a single mortgage loan. Eligible improvements range from general property maintenance like new HVAC, windows, or roof; to cosmetic updates like new flooring and paint or remodeling kitchens and baths; to a total gut renovation project or building an addition.

Renovation Loans are especially attractive to…

  • Buyers who are looking to turn a “fixer upper” into their dream home
  • Families looking for more space or making changes to support their goal of aging in place
  • Homeowners with insufficient equity to do a cash-out or HELOC for renovation costs
  • Homeowners who need more money to finish a project they already started

Loan Options

  • FHA Standard 203(k)

    Requires use of a General Contractor and HUD Consultant. Designed for higher cost or more complex projects. Contractor is paid in draws as work is completed.

  • FHA Limited 203(k)

    Allows up to 3 individual contractors and $35,000 in total rehab costs. Great for smaller, non-structural projects. Contractors are paid an initial deposit and the balance upon completion.

  • Conventional HomeStyle® Renovation

    Requires use of a General Contractor. Great for any size project. Contractor can receive a deposit up front, and balance is paid in draws as work is completed.

  • Conventional HomeStyle® Energy

    Allows for installation of EnergyStar® Rated materials like windows, appliances, or HVAC. Also allows for installation of renewable energy sources like solar panels. Contractors are paid in full after work is completed.

Finance of America employee holding loofah

FHA 203(K) Rehab Loan

Frequently Asked Questions

Is it important to go with an experienced lender?

Absolutely! Be sure to pick a lender who understands renovation loans. FAM is unique in that we have a special team dedicated only to renovation lending!

How is it possible to borrow more than the house is worth right now?

Instead of the normal “As Is” Value Appraisal, a Renovation Loan requires a “Subject To Repairs” Value Appraisal. The Appraisal will determine the value of the property assuming the proposed improvements were already completed.

How is the down payment calculated?

The down payment is a percentage of the total acquisition cost which is not only the purchase price of the property, but also includes the total rehab cost. For example, if you purchase a house for $200,000 and the total rehab cost is $100,000, the total acquisition cost would be $300,000. The down payment would be a % of $300,000. The required down payment varies by program and other factors. Talk to a FAM Mortgage Advisor to learn more!

What is included in the Total Rehab Cost?

The following are included in the Total Rehab Cost: Contractor Bid Amount, 10-20% Contingency for unforeseen costs, architectural or permit fees (if applicable), and fees associated with administering the draw process after closing.

What will the interest rate be?

Interest rates vary depending on several factors. Talk to a FAM Mortgage Advisor to learn more!

What paperwork is required?

In addition to typical qualifying documentation, renovation loans require your contractor to provide a bid for the work being completed, architectural plans & specs for any structural changes to the property, and general information about your contractor’s business. Other documentation may be required depending on the scope of the work.

How long does it take to close a renovation loan?

We recommend you allow 60 days for closing. We will work diligently alongside you and your contractor to close as quickly as possible. It is important you and your contractor are prepared to provide the documentation requested to facilitate the mortgage approval.

Can I do the work myself?

No, we do not allow Do-It-Yourself or Owner/GC – even if you are a licensed contractor.

Are there restrictions on the repairs allowed?

Yes. The Limited 203k can only include cosmetic updates, no structural changes to the property. The FHA Standard 203(k) and Conventional HomeStyle® Renovation allow for larger scale projects including structural changes like building an addition. The Conventional HomeStyle® Energy is limited to energy improvements only. Talk to a FAM Mortgage Advisor for more detail!

Does the work have to be completed prior to closing?

No. Finance of America Mortgage will set up a Rehab Escrow Account after closing to ensure the work gets completed AFTER closing.

Is there a time limit on completing the work?

Yes. Both FHA 203(k) products require the work be completed within 6 months of closing. The HomeStyle® Renovation must be completed within 9 months of closing. HomeStyle® Energy must be completed within 60 days of closing.

Why Finance of America Mortgage?

We’re not about pushing loan papers. We’re about moving your dream forward. And we do that through knowledgeable local advisors, a personal approach, and a variety of smart loan options.

Learn More About Why Finance of America Mortgage?

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