lender-express-personal-logo-white

Renovation Loans

Finance the Home and the Work — All in One Loan

A renovation loan allows you to purchase a home and pay for improvements using a single loan instead of two separate ones. Whether the home needs cosmetic updates or significant repairs, this type of financing wraps both costs into one monthly payment. 

For buyers who find a home they love but know it needs work, renovation loans remove the biggest obstacle: coming up with extra cash after closing. You can borrow based on what the home will be worth after the improvements are complete, not just what it costs today. 

Lender Express works with multiple wholesale lenders to find renovation loan options that fit your project, your budget, and your timeline. 

 

WHAT IS A RENOVATION LOAN? 

A renovation loan is a mortgage that combines the purchase price of a home with the estimated cost of repairs or upgrades into one loan. Instead of buying a home and then applying for a separate home improvement loan, you close on both at the same time. 

The most common renovation loan programs include the FHA 203(k), Fannie Mae HomeStyle, and Freddie Mac CHOICERenovation. Each program has its own guidelines, but the core idea is the same: the lender funds the purchase and holds renovation funds in escrow, releasing them to contractors as work is completed. 

Renovation loans work for primary residences and, depending on the program, investment properties in some cases. They are not the same as a home equity loan or a personal home improvement loan.

 

Key Benefits

  • One loan, one closing, one monthly payment
  • Borrow based on the after-improved value of the home
  • Finance repairs that would prevent approval for a standard mortgage
  • Avoid draining savings after closing to cover renovation costs
  • Access to FHA, conventional, and other program options
  • Work with contractors of your choice in many programs

 

HOW IT WORKS

  1. You identify a home and get a contractor estimate for the planned improvements.
  2. A lender-approved appraiser estimates the home’s value after the work is done.
  3. The loan is structured to cover both the purchase price and renovation costs.
  4. At closing, renovation funds are placed in escrow.
  5. Work begins after closing, with funds released in draws as milestones are met.
  6. You move in once the required work is complete.

 

Before you apply, it helps to have a clear picture of the total cost. You can use our mortgage calculator to estimate your monthly payment based on different loan amounts and renovation scopes.

Mortgage Calculator: https://lenderexpress.com/mortgage-calculator/

 

WHO THIS LOAN IS BEST FOR

Who This Loan Is Best For

  • Buyers purchasing a fixer-upper or distressed property
  • Homeowners who want to renovate their current home and refinance
  • Buyers in competitive markets where move-in-ready homes are limited or out of budget
  • First-time buyers who want to build equity through improvements
  • Buyers targeting homes that need updates to meet FHA or conventional standards

 

This loan is NOT the best fit for buyers who want a fully updated home from day one, or for projects that are large enough to require a full construction loan from the ground up.

 

BASIC REQUIREMENTS

General Requirements

  • Credit score requirements vary by program (FHA 203k typically starts at 580, conventional programs may require 620 or higher)
  • Minimum down payment depends on the program (FHA options may start at 3.5%)
  • Renovation costs must be supported by contractor bids and appraisal
  • Work must be completed by licensed contractors (in most programs)
  • Primary residence required for most renovation loan programs
  • Renovation scope must meet program guidelines

 

Your loan officer will walk you through the specific requirements based on the program that fits your situation.

Our Extensive Loan Product Offering Includes:

We leverage advanced lending technology to enhance every stage of the loan journey — from instant calculations and eligibility checks to secure document processing. This platform-driven approach allows us to deliver faster responses while maintaining accuracy and compliance.

  • Conventional Loans (including low down payment options)
  • FHA Loans
  • VA Loans (even for borrowers with credit challenges)
  • USDA Loans
  • Jumbo Loans
  • HELOCs and Home Equity Loans
  • Reverse Mortgages
  • 2-1 Buydowns (help your clients reduce their initial monthly payments)
  • Down Payment Assistance Programs (DPA)
  • Non-QM Loans (for borrowers who don’t fit traditional lending criteria)
  • DSCR Loans (multiple ways to structure for investors)
  • Bank Statement Loans (for self-employed borrowers)

COMMON QUESTIONS

What types of repairs can be covered by a renovation loan?
Most renovation loan programs cover a wide range of improvements including roofing, plumbing, electrical, HVAC, flooring, kitchen and bath remodels, structural repairs, and energy-efficiency upgrades. Luxury additions like pools are generally excluded from FHA 203(k) limited programs but may be allowed under other renovation options.
Do I have to use a specific contractor?
The contractor must be licensed and, depending on the program, may need to be approved by the lender. You typically cannot do the work yourself under these programs. Your loan officer will clarify the contractor requirements for the program you choose.
Can I use a renovation loan to refinance a home I already own?
Yes. Renovation loans can be used to refinance an existing mortgage while adding funds for improvements. This can be a good option for homeowners who want to update their current home without taking on a second loan.
How long does the renovation have to be completed?
Most programs set a completion deadline, typically six months from closing. The timeframe depends on the scope of work and the specific loan program. Your loan officer will outline the timeline requirements before you apply.
What happens if the renovation costs more than expected?
You can build a contingency reserve into the loan, usually 10 to 20 percent of the renovation budget, to cover unexpected costs. If the project comes in under budget, remaining funds may be applied to your loan balance or returned, depending on the program.
Is a renovation loan the same as a construction loan?
No. A renovation loan is used to improve an existing structure. A construction loan is used to build a new home from the ground up. If you are starting with a vacant lot or tearing down to rebuild, a construction loan is the right fit.

Helpful Tools and Resources

Open Mortgage Calculator →

If you are just getting started, you can download our free First-Time Homebuyer Guide for a step-by-step breakdown of the entire process, including what to expect when buying a home that needs work. 

Download Free Guide →

Related Programs

View All Programs →
Construction Loans →
FHA Loans →

Why Lender Express

We Work for You, Not a Bank

Lender Express is a mortgage broker, not a lender. That distinction matters. We work for you, not for a single bank. Our job is to compare loan options across a wide network and help you find a solution that fits your goals and your situation.


Our loan officers take the time to understand what matters most to you before making any recommendations. The focus is always on clear guidance, honest answers, and helping you make a confident decision.

Ready to explore renovation loan options?

Talk to a Lender Express loan officer to review programs, run the numbers, and find the right fit for your project.
Find a Loan Officer
Apply Now

Interest Rates, APR’s & programs are illustrations subject to change at any time. These do not constitute a ‘Loan or Good Faith Estimate’ for payments and closing costs. Not all applicants will qualify. APR may vary by product type. Consumer is not obligated to use any party mentioned. Lender Express Mortgage is not affiliated with FHA, VA, USDA or the Federal Government. Lender Express Mortgage, LLC supports Equal Housing Opportunity (www.nmlsconsumeraccess.org) | (888) 286-0367 | 2500 S Power Rd Bldg 9 Ste 133, Mesa, AZ 85209. Regulated by the AZ Department of Financial Institutions. Arizona License #MB-1008082, CA #60DBO-140688, CO #MB-1963444, FL #MBR4665, IA #1963444, OR #1963444, PA #79751, TX #1963444. Figure: 7 tac § 80.200(b) consumer wishing to file a complaint against a company or a residential mortgage loan originator should complete and send a complaint form to the Texas department of savings and mortgage lending, 2601 North Lamar, suite 201, Austin, Texas 78705. Complaint forms and instructions may be obtained from the department website at www.Sml.Texas.Gov. A toll-free consumer hotline is available at 1-877-276-5550. The department maintains a recovery fund to make payments of certain actual out of pocket damages sustained by borrowers caused by acts of licensed residential mortgage loan originators. A written application for reimbursement from the recovery fund must be filed with and investigated by the department prior to the payment of a claim. For more information about the recovery fund, please consult the department’s website at www.Sml.Texas.Gov. Above information and content is accurate as of 6/22.