Renovation Loan Guide
Congratulations on beginning your home purchase journey! We hope this guide helps you decide if a renovation loan is right for you. 

Renovation financing allows a qualified borrower to purchase or refinance a home in less than ideal condition and make improvements immediately after closing. 

The cost of the renovation is financed into the new mortgage and the amount of financing available is based on the value of the home after the improvements are made “as completed value”. This financing can be a helpful alternative to higher rate credit card or home equity financing for many borrowers. 

Between a renovation loan, refinancing to include renovation costs or taking out an equity line of credit, you have options. Let’s explore what those are.


 Homebuyers can purchase homes in less than ideal condition (“as-is”) and address problems immediately after closing. Homeowners may upgrade, modernize or expand the home to better serve their needs or to increase the home’s value. 

Real estate agents can sell properties in need of upgrades or properties that need repairs by helping potential homebuyers envision remodeling possibilities.

Investors can purchase homes in need of repairs or upgrades with low rate financing, freeing up capital for additional investment opportunities. 

Additionally, updated properties can typically fetch higher rents or improve the value in the event of resale. 

        *Fannie Mae HomeStyle® Renovation Mortgage 
          Include renovation costs in one loan, including an option for no mortgage              insurance with qualifying down payment.  

        *HomeStyle® for Investors
          An investment-specific loan covering single unit properties with all  
          renovation work allowed, including luxury additions. 

        *203(K) Standard 
          With a low down payment, get one loan to purchase or refinance and                       include rehab work. 

        *203(K) Limited 
          Get up to $35,000 toward value-adding home improvements combined                  with your purchase mortgage. 


This is what a borrower can expect if they proceed through the renovation loan process and qualify for the loan. 

·         The borrower contacts a renovation loan officer. 

·         Product options are discussed and the pre-approval decision is made.


·         Contract of sale is executed (purchase agreement) using the actual sales

            price, selected type of financing and the required down payment.


·         The renovation estimate is completed and the contractor or HUD (Dept. of

             Housing and Urban Development) consultant submits it to the lender.


·         Appraisal is ordered.


·         Loan conditions are cleared and the loan commitment is finalized.


·         The loan closes, purchase money is funded and the associated repair funds

              are held in an escrow account until renovation begins.


·         Renovation funds are disbursed based on specific loan guidelines, and draw

            schedule is subject to satisfactory work inspections.


Aren’t renovation loans complicated and hard to do? 
No, that’s a myth. Experienced professionals can make the process seamless. In reality, it all comes down to the people that are involved in the process.

Don’t renovation loans take too long to close?
Renovation loans have more steps than most standard purchase loans, but it’s possible for them to close in 30 days or less. 

If I’m getting a renovation loan, do I need to order a home inspection? The Standard FHA 203k requires an inspection by a HUD-approved consultant the Lender will provide, however the borrower can order an additional home inspection if they desire (Common on a Purchase). 

Can a renovation loan be used to renovate a condominium? 
Yes, but certain restrictions apply to condominiums. Restrictions are based on the number of units experiencing renovation at one time, limiting interior renovation work and the number of units in the project. Ask a Movement renovation specialist for details. 

How long before repair work can begin? 
Work must begin within the first 30 days of the loan closing and can begin as soon as the renovation escrow account is set up and proceeds are disbursed.

What is a typical timeline of repairs? 
Work should begin within 30 days of closing and must be completed in a six month period. It can’t stop for intervals greater than 30 days.

Is the home ready to move in as soon as the loan closes? 
If the home is livable per county and city regulations and no mortgage payments are financed in the loan by Movement Mortgage (optional on certain loan programs), the home is ready to move into. 


As one of the 10 largest retail mortgage lenders in the U.S., Movement Mortgage exists to love and value people by leading a Movement of Change in our industry, corporate culture and communities. 

Our innovative mortgage process is a game-changer, serving real estate agents and homebuyers with true excellence and efficiency. Movement employs more than 4,500 people and has more than 650 branches in the U.S. spanning 48 states. Our non-profit organization, the Movement Foundation, has reinvested more than $30 million in communities to date. 
Carol Borman
Carol Borman
Sales Associate
259 Main St Chester NJ 07930