Renovation (203k / HomeStyle)

Buyers renovating their purchase

Finance the purchase AND renovation in a single loan. Turn a fixer-upper into your dream home without draining savings for repairs.

Program Overview

How Renovation (203k / HomeStyle) Loans Work

Renovation loans let you finance both the purchase of a home and the cost of renovating it in a single mortgage. Instead of buying a home and then taking out a separate home improvement loan or draining your savings, the renovation costs are included in your primary mortgage and spread over 15 to 30 years.

The two most common renovation loan programs are the FHA 203(k) and the Fannie Mae HomeStyle Renovation. The FHA 203(k) comes in two versions: the Limited 203(k) for cosmetic improvements up to $35,000, and the Standard 203(k) for larger projects including structural work, room additions, and major systems replacements. The HomeStyle Renovation loan is a conventional product that allows renovation costs up to 75% of the as-completed appraised value.

Renovation loans open up a much larger pool of available homes. Properties that other buyers pass over because they need work become opportunities for you. In competitive markets, this can be a significant strategic advantage. You can bid on homes that have fewer competing offers and customize them to your exact preferences.

Renovation funds are held in an escrow account and disbursed to the contractor as work is completed, similar to a construction loan draw process. An independent consultant or inspector verifies the work at each stage. This protects you by ensuring the contractor is paid only for completed, quality work.

Key Features

FHA 203(k) Limited: cosmetic repairs up to $35,000
FHA 203(k) Standard: structural and major renovations
Fannie Mae HomeStyle: conventional renovation up to 75% of as-completed value
Single loan covers purchase price plus renovation costs
Repairs completed after closing
Available for primary residences (HomeStyle also available for some investment properties)

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The Process

How It Works

Identify the Property and Scope of Work

You find a property and work with a contractor to develop a detailed scope of work and cost estimate. We determine which renovation program best fits your project and budget.

Appraisal Based on Completed Value

The appraiser values the property based on its projected after-renovation condition. Your loan amount is based on the purchase price plus renovation costs, not the property's current as-is value.

Close and Begin Renovations

After closing, renovation funds are held in escrow. Your contractor begins work according to the approved plan. Payments are released to the contractor as work milestones are completed and inspected.

Move Into Your Renovated Home

Once all renovation work is complete and a final inspection confirms the scope of work has been fulfilled, any remaining escrow funds are applied to your loan balance. You enjoy a home customized to your preferences.

Ideal Borrower

Who This Program Is For

Renovation loans are ideal for buyers who see potential in properties that need work and want to finance improvements without separate financing.

Buyers purchasing a fixer-upper in a desirable neighborhood

Homebuyers in competitive markets looking at homes other buyers pass over

Buyers who want to customize a home to their specific needs and style

Investors using HomeStyle renovation financing for rental properties

Homeowners refinancing with renovation funds to improve their current home

Run the Numbers

Use our calculator to explore payment scenarios, compare options, and see how a renovation (203k / homestyle) loan could fit your financial plan.

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Common Questions

Renovation (203k / HomeStyle) FAQ

The Limited 203(k) is for cosmetic, non-structural improvements up to $35,000. Think new flooring, paint, kitchen updates, appliance replacement, and minor repairs. The Standard 203(k) is for larger projects including structural changes, room additions, and major systems work (plumbing, electrical, HVAC). The Standard requires a HUD consultant to oversee the project.

Generally, no. Both 203(k) and HomeStyle programs require licensed contractors to complete the work. This protects all parties by ensuring the work meets code, is done safely, and is completed on schedule. Labor performed by the homeowner is typically not an eligible renovation cost.

The FHA 203(k) Standard allows up to 6 months for renovation completion. The Limited 203(k) also allows 6 months. HomeStyle typically allows up to 12 months. Extensions may be available in certain circumstances. It is important to work with a contractor who can meet these timelines.

Some buyers move in immediately and live in the home during renovations (if habitable). Others arrange temporary housing. The 203(k) Standard program allows up to 6 months of mortgage payments to be financed into the loan as a temporary housing allowance, reducing your out-of-pocket cost during the renovation period.

Ready to Explore Renovation (203k / HomeStyle) Loans?

Let our team walk you through the details, run the numbers for your situation, and help you decide if this is the right program for your goals.

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