Home / Loan programs / Renovation
SpecialtyA renovation mortgage lets you finance the house and the work in one closing — useful when the right property is the one that still needs a kitchen, roof, or safety repairs.
Instead of buying with a standard mortgage and then hunting for a second loan to fix the house, a renovation program wraps eligible improvements into the first mortgage. Funds are held and released as work is done. That is slower than paying cash, and more structured than a credit-card remodel.
Two retail paths we discuss most often: FHA 203(k) (Limited and Standard) and Fannie Mae HomeStyle Renovation. Other tools — HELOC, home-equity loan, cash-out refinance — are equity-based and usually assume you already own the home.
FHA 203(k) is HUD’s rehabilitation mortgage. Limited 203(k) is for smaller, more cosmetic or non-structural work; Standard 203(k) is for heavier rehab and typically requires a HUD consultant. HUD publishes the current Limited 203(k) dollar cap and eligible work lists. We will not print a cap here because HUD updates it.
Work has to meet FHA minimum property standards when it is finished. Luxury items that HUD excludes are not a 203(k) project. If the house is unsafe until repairs are done, this is often the product that makes the purchase financeable.
FHA product context: HUD single-family programs. Down payment and MIP follow FHA — see FHA loans.
HomeStyle is a conventional renovation mortgage: purchase or refinance plus eligible improvements in one loan. It can be more flexible than 203(k) on certain improvements, and it uses conventional PMI rules instead of FHA MIP. Credit, LTV, and contractor requirements follow Fannie and the lender overlay.
Budget and bids come before closing, not after. Contractors must be acceptable to the program. Inspections and draw requests happen as work proceeds. If you need to move in tomorrow and remodel next year with cash, a standard purchase may be simpler. If the appraisal “as-is” cannot support a standard FHA or conventional loan, renovation is the point.
Home-equity loans and HELOCs use equity you already have. Personal loans are unsecured and usually cost more. Hard-money is an investor/bridge tool with different pricing and risk — not a typical owner-occupant purchase program. If someone promises “quick approval” with no documentation, that is not an agency renovation mortgage.
Older housing stock in both states is exactly why renovation mortgages exist: knob-and-tube, roofs, and safety items that fail FHA. PHFA has described a Keystone Flex Purchase & Improvement variant with a published repair figure on PHFA’s page — confirm the current cap on phfa.org, do not use a number from memory.
Figures that change each year live at the source, not on this page.
That is the job of FHA 203(k) and Fannie HomeStyle when the work and the borrower qualify. Standard FHA or conventional may decline the property until repairs are done.
HUD publishes the current Limited 203(k) cap and Standard 203(k) rules. We will not quote a figure here. Ask us, and confirm on HUD.gov.
No. A HELOC is a revolving line against equity you already own. A 203(k) or HomeStyle wraps work into a first mortgage, including at purchase.
Usually not. Bids, consultants (when required), and draw setup add time. Write the contract with that in mind.
Written by Steve Umansky, Sr. Branch Manager, NMLS #61764. Last reviewed 2026-09-15. Program parameters are subject to change and to the guidelines in effect at application. Not a commitment to lend.
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