Rehab Loans
Turn a “Fixer-Upper” Into Your Forever Home
Dream home hiding behind dated wallpaper? A Rehab Loan—also known as an FHA 203(k) loan or renovation loan—lets you finance both the purchase and the repairs in one convenient mortgage.
Get Your QuoteWhat Is an FHA 203(k) Rehab Loan?
- Single loan bundles acquisition price plus renovation costs
- Backed by the Federal Housing Administration, so credit and down-payment requirements are more flexible
- Ideal when the perfect property needs more than a coat of paint
Key Rehab Loan Benefits
- One closing, one payment: Skip juggling multiple loans or credit lines.
- Competitive interest rates comparable to standard FHA mortgages.
- Boost property value: Strategic upgrades can raise appraisal and resale price.
- Broad renovation scope: From roof replacement to kitchen remodels, even structural repairs.
- Investment opportunity: Buy undervalued homes, renovate, and build equity fast.
Rehab Loan Requirements
| Requirement | Typical Guideline* | Why It Matters |
|---|---|---|
| Credit score | 580+ for 3.5 % down; 500–579 with 10 % down | Flexible compared with many conventional options |
| Down payment | As low as 3.5 % | Keeps more cash on hand for the rehab itself |
| Primary residence | Home must become your main residence within 60 days | Ensures FHA program integrity |
| Licensed contractor bids | Detailed, written estimates required | Sets realistic renovation budget |
The Rehab Loan Process
- Pre-qualify online to gauge budget.
- Find a property and order a feasibility study.
- Secure contractor bids and submit your rehab loan package.
- Appraisal & underwriting factor in after-repair value (ARV).
- Close the loan; renovation begins, with draws released as work is completed.
Rehab Loan vs. Conventional Renovation Options
| Feature | Rehab Loan / FHA 203(k) | Conventional HomeStyle® |
|---|---|---|
| Minimum down payment | 3.5 % | 5 % |
| Mortgage insurance | Up-front & monthly MIP | PMI, cancelable at 80 % LTV |
| Eligible projects | Structural & cosmetic | Primarily cosmetic |
| Ideal for | Buyers with moderate credit | Borrowers with strong credit & higher equity |
Rehab Loan FAQs
A rehab loan, also known as a renovation loan, allows you to finance both the purchase of a home and the cost of renovations in a single mortgage. It’s ideal for buyers looking at fixer-uppers or current homeowners wanting to remodel without taking out a separate loan.
Rehab loans can be used for a wide range of improvements, including kitchen remodels, bathroom updates, roof replacements, energy efficiency upgrades, and even structural repairs. The renovations must add value and be completed by licensed contractors.
No—rehab loans are available for both home purchases and refinances. You can use one to buy a property that needs work and roll the renovation costs into your mortgage, or refinance your existing home and fund renovations at the same time.
Common options include FHA 203(k) loans and conventional renovation loans like the Fannie Mae Homestyle loan. Each program has different guidelines, and our team will help you choose the best one based on your goals, budget, and property condition.
Ready to Rehab & Move In?
Our experienced mortgage professionals guide you from contractor bids to final inspection.
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