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What Type of Loans Exist for Renovations?



Are there any loan options for home renovations out there? There are two, but one is better than the other.

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There are two types of loans that you can get to help fund your renovation project: the FHA loan and conventional loan.

The conventional loan is the more difficult of the two to get approved for. You need more money down than the other one, and we don’t use that one very often for renovation projects.

The FHA 203K loan has two different options, depending on the size of your renovation project. There’s a streamlined loan that is for repairs that are $30,000 or less and a full FHA 203k that is for as much as you need, as long as the house appraises as repaired.


On a full FHA loan, you can do whatever you would like to the home, as long as it appraises.


When you apply for the loan, you need to have two separate contractors come out to the house and write a bid for the repairs that they see that need to be done. These two bids need to match—not on the dollar amount but on what needs to be done to the home. Those bids are then sent to the lender so they can approach for the requested amount.

For the streamlined FHA loan, those repairs can only go up to $30,000 and can’t be on anything structural, so no walls can be knocked out or rooms added. On a full FHA loan, you can do whatever you would like to the home—add or take out walls, add a new master bedroom or bathroom—as long as the house appraises with those items included and it’s under the lending limit, which in our area is $271,000.

If you have any questions about renovation loans, feel free to give me a call. I’d be happy to help you.

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