Turning a “maybe” home into a “yes”
Have you ever walked into a house and thought, “I love the location… but not the kitchen”? Renovation loans exist for exactly that reason. They allow buyers to purchase a home and finance the renovations at the same time, rolling everything into one mortgage.
Instead of settling—or paying out of pocket—renovation loans help you turn a fixer-upper into your ideal home.
What Is a Renovation Loan?
A renovation loan combines the purchase price (or refinance balance) with the cost of approved renovations into a single loan. You close once, make one monthly payment, and complete repairs after closing using escrowed funds.
These loans are ideal for buyers who want to improve a home rather than compete for fully renovated listings.
FHA 203(k): The Most Popular Renovation Loan
The FHA 203(k) program is designed for buyers who want flexibility and lower upfront barriers.
Two Types of FHA 203(k):
- Limited 203(k): Minor renovations (typically cosmetic upgrades)
- Standard 203(k): Major repairs, structural work, room additions
Common uses include:
- Kitchens and bathrooms
- Flooring and paint
- Roof, HVAC, or plumbing
- Accessibility upgrades
FHA 203(k) loans are especially helpful for first-time buyers purchasing homes that don’t qualify for traditional financing due to condition.
Conventional Renovation Loan Options
For buyers with stronger credit profiles, conventional renovation loans offer another path. These programs allow renovations while following conventional lending guidelines—often with:
- Higher loan limits
- Fewer property restrictions
- Potentially lower long-term insurance costs
These loans are popular for move-up buyers or buyers renovating higher-value homes.
What Can Renovation Funds Be Used For?
Renovation loans typically allow:
- Cosmetic upgrades
- Functional improvements
- Safety and code repairs
- Energy efficiency upgrades
Luxury items (like pools) may be restricted, but most improvements that increase value and livability are allowed.
Why Buyers Use Renovation Loans
- Less competition than turnkey homes
- Ability to customize from day one
- Potential for instant equity
- Avoids large cash renovation expenses
Instead of waiting for the “perfect” home, buyers create it.
How Affinity Home Lending Helps With Renovation Financing
We help buyers:
- Choose the right renovation loan program
- Coordinate contractors and bids
- Navigate renovation timelines and escrow draws
- Avoid common renovation-loan pitfalls
- Close smoothly—even on fixer-uppers
Renovation loans require planning—but the payoff can be significant.