Construction & Renovation Loan
Conventional Renovation
Buy the house that needs work, or update the one you own, with one loan that covers both. The loan is based on the home's value after the renovation, and the contractor is paid as the work is completed.
- CoversPurchase or refinance plus renovation
- Based onThe home's value after the work
- PropertyPrimary, second home or investment
- Common programFannie Mae HomeStyle
How It Works
One loan, one closing, the work included.
A conventional renovation loan, such as Fannie Mae's HomeStyle, adds the cost of the renovation to your purchase or refinance. The appraiser values the home as it will be when the work is done, and the renovation funds are held and released in stages as the work is finished.
- 01
Bids, plans and a contractor
You choose a licensed contractor who prepares a detailed bid. The lender reviews the contractor and the scope of work before closing.
- 02
An as-completed appraisal
The appraiser values the home based on the plans, and the loan is sized from that future value and the full renovation budget.
- 03
We find a lender that renovates
Not every lender offers renovation loans, and their requirements differ. We match your project with one that does and help you through the draws to completion.
Program Highlights
Why buyers choose a renovation loan.
- Combines the purchase or refinance and the renovation into one loan
- Based on the home's value after the work is done
- Renovation funds are released as completed work is inspected
- Can be used for primary homes, second homes and investment properties
- Covers a wide range of projects, from kitchens and roofs to additions
- One closing and one monthly payment
Common Questions
What buyers ask about renovation loans.
A renovation loan is a mortgage that includes the cost of repairs or improvements. Instead of buying a home and then taking out a second loan for the work, you finance both in one loan, based on what the home will be worth when the work is done.
HomeStyle is Fannie Mae's conventional renovation program. It lets you buy or refinance a home and finance the renovation in the same loan, for a primary residence, second home or eligible investment property. It follows conventional credit and down payment standards, and the renovation must be completed by a contractor within the timeframe the program allows.
You qualify much like a regular conventional loan, with credit, income and down payment reviewed by the lender. The project needs a licensed contractor, a detailed bid and an appraisal based on the finished home. The lender approves the contractor and the plans before closing.
Start with a licensed contractor and a written bid for the work. We then find a lender that offers renovation loans, review your numbers and coordinate the as-completed appraisal. After closing, the contractor is paid in stages as the work is inspected and finished.
Both finance the home and the renovation in one loan. FHA 203(k) is more flexible on credit but is limited to primary residences and carries FHA mortgage insurance. A conventional renovation loan generally needs stronger credit, but can also be used for second homes and investment properties, and its mortgage insurance can be removed later.
Generally no. Most conventional renovation programs require a licensed contractor, though some allow limited work by the homeowner under strict conditions. We confirm the rules with the lender before you plan your project.
General information only, not a commitment to lend. Loan programs, guidelines, interest rates and terms are subject to change without advance notice.
Related Programs
Price your renovation across our lender network.
Tell us about the home and the work you have in mind. We will find a lender that offers renovation loans and show you the numbers.