Home Not HGTV Ready? We’ve got you covered!

A house with good bones but a dated interior can often deter buyers. But what if they could buy  and update it before moving in? 

A renovation loan enables buyers to purchase and repair, update or expand a property using a single loan. 

Starting at 3.5% down, these mortgages open up a world of possibilities for your clients looking to move into the home of their dreams.

Renovation loans can be backed by FHA and are commonly referred to as a 203(k) loan or backed by Fannie Mae, known as a homestyle renovation loan. Under either of these entities, loans fall into two categories – limited or streamline and standard or full. Here are a few comments on each.

  • Limited or Streamline Option: Has a set maximum dollar amount of work that can be financed and may limit the scope of the work done. It typically allows funds to be disbursed upfront at closing before any work has been completed and is used for smaller, less complex projects.


  • Standard or Full Option: These loans will not have a maximum amount of work that can be done, but must conform to the program’s maximum loan limits. These are used for more complex projects, which could include moving of load bearing walls or full room additions to the home.


Some common uses of a renovation loan are:

  • Update kitchen and baths
  • Improve curb appeal or function
  • Create more space
  • Eliminate health and safety hazards
  • Rehab antiquated plumbing or electric
  • Install or repair the roof, gutters and downspouts
  • Ensure accessibility for a disabled person
  • Make a home more energy-efficient


Improvements financed through a renovation loan will require a consultant to work with the borrower, appraiser and lender to assure all items have been addressed and that the work is being completed before funds are released. The coordinator and communication between agent, client, lender, contract and consultant is crucial to the success of this program – and when done right, can make an average home a client’s dream home.


Reach out to a Key Mortgage Loan Officer to learn more about how these programs work and how to properly educate your client on how to best utilize these loans available to them.