When shopping for a home, you may come across properties that aren’t quite what you are looking for but are oozing with potential. With one of Fairway’s renovation loan options, you can roll the cost of those repairs and improvements into one loan, which can save you both time and money.
When using a renovation mortgage loan to purchase a home, Fairway combines the purchase contract price with the estimated costs of necessary repairs and improvements to calculate your adjusted sales price. You can also use a renovation loan to refinance your existing mortgage and roll repair costs into your single home loan balance.
If the house is temporary uninhabitable during construction, you can finance up to six months of mortgage payments directly into the loan, eliminating the strain of making concurrent housing payments while renovations are underway.
Eligible repairs and upgrades vary by loan program. Talk with your Fairway mortgage advisor to explore the specific options best suited for your project scope.
When shopping for a home, you may discover properties in ideal locations that need updates to reach their full potential. A renovation loan lets you bundle the purchase or refinance price along with improvement costs into one single mortgage—saving time and reducing administrative hassle.
Core Renovation Programs Include:
How does a renovation loan work?
Renovation mortgage loans allow buyers and homeowners to borrow against the home’s estimated “subject-to-completion” value rather than its current, unimproved condition.
Example: If the Jones family finds a home for $250,000 that requires $50,000 in bathroom updates, a renovation mortgage allows them to roll the total $300,000 cost into a single loan. Depending on the program, down payment requirements (ranging between 3% to 5%) apply to the total $300,000 combined project price.
Renovation loans are also effective during a refinance, allowing homeowners to unlock equity for home improvements even if the current home value prior to repairs would limit traditional borrowing limits.
Are renovation mortgage loans a good idea?
If your current home or prospective home requires immediate repairs or major improvements, financing those costs into a mortgage is often significantly more manageable than paying out-of-pocket or utilizing high-cost short-term credit.
At Fairway, renovation loans are structured as fixed-rate mortgages, ensuring predictable principal and interest payments throughout the entire life of the loan.
Can you use a VA or USDA loan for renovations?
Yes! Active-duty military, eligible veterans, and surviving spouses can utilize a VA renovation loan. Eligible borrowers can borrow up to 100% of the future home value*, plus an additional $35,000 for non-structural, cosmetic improvements.
Additionally, eligible rural and suburban buyers can explore USDA renovation financing options** to cover combined purchase and repair costs.
*A down payment is required if the borrower does not have full VA entitlement or when the loan amount exceeds VA county limits. VA loans subject to individual entitlement amounts, credit guidelines, and property limits.
**USDA loans subject to USDA program guidelines, household income caps, and geographic property eligibility requirements.
HomeStyle® Renovation Loans
Fannie Mae’s HomeStyle® Renovation program lets you finance almost any improvement project on a primary residence, second home, or investment property including luxury additions like in-ground pools. All improvements must be permanently affixed to the property and completed by a qualified, licensed contractor.
FHA Limited 203(k) Rehabilitation Mortgage
The FHA Limited 203(k) provides up to $35,000 in additional funds to cover minor, cosmetic, non-structural updates—such as updating kitchen cabinets, replacing flooring, installing new appliances, or repairing a roof.
FHA Standard 203(k) Rehabilitation Mortgage
For extensive remodels exceeding $35,000 or structural changes (such as room additions, structural repairs, or major layout alterations), the Standard FHA 203(k) program provides the necessary financing structure.***
***Final disbursement of renovation funds is subject to inspector verification and completion milestones.
Fairway is an equal housing lender. Financial qualifications, minimum credit scores, contractor requirements, and program guidelines apply for all renovation mortgage products. Fairway is not affiliated with or acting on behalf of HUD/FHA, VA, USDA, or any government agency.
