Is a renovation loan right for you?
Looking at a fixer-upper or planning major improvements on your current home? A renovation loan may offer a flexible way to finance both the purchase (or refinance) and the repairs in one streamlined mortgage.
These loans allow borrowers to combine the cost of buying a home and funding its renovations into a single loan, making it easier to manage both the budget and the process.
Benefits of a renovation loan
Renovation loans can offer several benefits for homebuyers and current homeowners looking to improve a property:
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Finance the purchase and renovation together in one mortgage
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Reduce upfront costs by consolidating loan closing fees
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Available for purchases or refinances, depending on your goals
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Support a variety of projects, from repairs to full home updates
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Potential to increase home value through approved improvements
Renovation loan eligibility requirements
While requirements vary by lender and loan type, here are some general factors that are often considered:
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Credit history that meets current standards
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Ability to make a qualifying down payment
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Property typically must be your primary residence
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Debt-to-income ratio within acceptable range
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Project scope and contractor estimates may be required
Have a property in mind? We’ll help you explore renovation loan options that fit your vision and financial goals.
Check out what your monthly payment could be by using our 203k Renovation Mortgage Calculator…
Our mortgage calculators are for demonstration purposes only and may not reflect actual numbers for your specific mortgage. Contact us and we will walk you through the best possible mortgage scenario for your specific needs!
Monthly Payment Breakdown
Principal & Interest (P&I)
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MIP
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Taxes & HOA
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Homeowners Insurance
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Loan Type
Purchase Price
Home Value
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Down Payment
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Current Mortgage Balance
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Total Renovation Costs
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Upfront MIP
$
Total Loan Amount
New Loan Amount
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Contingency Reserve
A contingency reserve is an additional amount of money set aside to cover unexpected costs that may arise during the renovation process. It's typically 10-20% of the total renovation cost. This reserve helps ensure that you have funds available if unforeseen expenses occur, helping to keep your project on track.
Estimated Taxes & Insurance
Property taxes are generally estimated to be 1.2% of the home's value, but may vary based on your location. Annual homeowners insurance is roughly 0.35% of the home's value but can change based on insurer. Your loan specialist can help you determine property tax and insurance rates in your area.
Expected Home Value Increase
The expected increase in home value to qualify for a home improvement mortgage can vary depending on the lender and loan program.
FHA 203(k) loans typically require that the improvements will increase the property value by at least the amount of the repairs.
Renovation Associated Costs
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Renovation Cost Estimate
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Contingency Reserve
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Draw Inspection & Title Update
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203(k) Consultant Required
203(k) Consultant Fees
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203(k) Supplemental Origination Fee
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Estimated Monthly Payment
$ /mo
Loan Type
Total Renovation Costs
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Loan amount
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Interest rate
Loan term
Taxes & insurance included?
Property tax
Homeowner's insurance
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Upfront MIP
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Annual MIP rate
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Monthly MIP
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HOA dues
$
Payment Breakdown
Amortization
Principal vs. Interest
Amortization Schedule Breakdown
Our detailed amortization schedule breaks down your mortgage payments, showing how they are split between interest and principal over the life of your loan.
Note: The actual monthly payment may be higher than what is shown here, as this schedule does not account for variable costs such as property taxes and home insurance, which are often included in your total mortgage payment.
- Principal payments: $ (the amount borrowed)
- Interest payments: $ (the cost of borrowing)
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