In short
A renovation loan is a mortgage that combines the cost of a home and eligible improvements into one loan. The two main routes are the FHA 203(k) and Fannie Mae HomeStyle, available for buying a home that needs work or refinancing one you already own.
Reviewed by Ron Pippin, NMLS #218333 · Last updated October 21, 2026
Can I buy or refinance a home and finance the repairs in the same loan?
Often, yes. Renovation loans are built to combine the home and eligible improvements into one mortgage, so you are not juggling a separate loan or a credit card for the work. The two main routes are the FHA 203(k) and Fannie Mae's HomeStyle loan, and each comes in a purchase and a refinance version. Both review the work up front: you get contractor bids, the lender reviews the scope and cost, and funds for the work are released as it gets done. I'll tell you the difference between the two and which one fits your property, your plans and your budget.
Key takeaways
Sometimes the right house is the one nobody else wants yet. Dated kitchen, tired roof, a basement that needs finishing. Or maybe you already own the home and it just needs work. A renovation loan lets you finance the home and eligible improvements together in one mortgage. I look at the planned work, the contractor requirements and the property's condition early, so you know what is possible before you sign anything.
Renovation Financing in Ogden, UT
Plenty of homes in and around Ogden have good bones and a lot of deferred maintenance. Some buyers walk away from those houses because they can't picture paying for the work on top of the down payment. Some homeowners put off repairs for the same reason. A renovation loan can change that math.
The idea is simple. Instead of buying the home with one loan and then scrambling to pay for repairs another way, you finance the home and eligible improvements together. One loan, one closing, one monthly payment.
The Two Main Routes
There are two programs I look at first for most renovation scenarios.
FHA 203(k). This is an FHA-insured loan for a primary residence. It works for buying a home that needs work or for refinancing the home you already live in. There are two versions: a limited 203(k) for smaller, non-structural projects, and a standard 203(k) for bigger jobs, including structural work. FHA's more flexible qualifying can make it a good fit for some borrowers. See FHA 203(k) purchase loans and FHA 203(k) refinance loans.
Fannie Mae HomeStyle. This is a conventional renovation loan. It follows conventional guidelines rather than FHA's, and it can make sense when conventional financing fits you better overall. See HomeStyle purchase loans and HomeStyle refinance loans.
Which one fits depends on your credit, your down payment, the property and the work you have in mind. I'll tell you the difference, what you gain and what you give up with each, and why I'm recommending one over the other.
How the Process Works
Renovation loans have more moving parts than a standard mortgage. Here is the general flow:
- Talk through the project. What do you want done, and why? The reason why I'm asking is that the scope of work drives which program fits.
- Get contractor bids. Lenders want detailed, written bids from a qualified contractor. Most programs have rules about who can do the work.
- Lender review of the work. The scope and cost are reviewed before closing. On larger projects, that review can be more involved.
- Appraisal based on the finished home. The appraiser looks at what the home is expected to be worth once the work is complete.
- Close, then build. Funds for the improvements are typically held and released as the work is completed and checked.
None of these steps is a big deal on its own. The trick is getting them lined up early so you don't hit surprises right before closing.
Why Review the Work Early
Most renovation loan headaches come from finding out too late that a contractor doesn't meet the lender's requirements, a bid is missing detail, or the property needs more than anyone expected. I'd rather look at that up front. Before you commit to a house, let's look at the condition, the planned work and the contractor situation, and make sure the full payment works for your life.
Why Work With an Independent Broker
Not every lender offers renovation loans, and the ones that do don't all handle them the same way. As an independent broker, I have multiple options. If one lender's rules on contractors, property condition or project type get in the way, there is somewhere else to look.
Rates come up a lot with renovation loans. Your rate depends on your scenario and the day's market. Reach out and I'll price it for real.
Purchase or Refinance
If you're buying, a renovation loan lets you make an offer on a home that needs work and plan the improvements as part of the purchase.
If you already own the home, a renovation refinance can replace your current mortgage and fund the improvements at the same time. If you'd rather keep your current first mortgage, we can compare that against a HELOC or a standard refinance.
Let's see what we can do. Call or text me with the address and your plans, and we'll run some numbers together.
Everything on this page is a general, illustrative example. It is not an offer or a commitment to lend, and it does not reflect current interest rates or guaranteed terms. Program rules, eligibility and availability change over time. Call or text me for details on your own situation.
Quick facts
- Main programs
- FHA 203(k) and Fannie Mae HomeStyle
- Use
- Purchase or refinance
- Structure
- Home and eligible improvements in one loan
- Contractor
- Detailed bids from a qualified contractor typically required
- Work funds
- Typically released as the work is completed
Is this loan right for you?
Who it's for
- Buyers who found a home that needs updates or repairs
- Homeowners who want to renovate the home they already own
- People who would rather finance improvements in their mortgage than use separate loans or cards
- Borrowers willing to work with a qualified contractor and a reviewed scope of work
Who it may not fit
- Someone who wants to start work immediately without bids or a lender review
- Small cosmetic projects you could easily pay for in cash
Pros and cons
Pros
- One loan and one closing for the home and the improvements
- Can open up homes other buyers pass over
- Work is reviewed up front, so the plan is clear before you commit
- FHA and conventional routes, each for purchase or refinance
Trade-offs to weigh
- More paperwork and steps than a standard mortgage
- Contractor and bid requirements limit how the work gets done
- Projects can run into delays or extra costs, so a cushion matters
Frequently asked questions
What is the difference between an FHA 203(k) and a HomeStyle loan?
The 203(k) is an FHA-insured loan for a primary residence and follows FHA's more flexible qualifying. HomeStyle is a conventional loan from Fannie Mae and follows conventional guidelines. Which fits better depends on your credit, down payment, the property and the work. I'll walk you through both and explain why I recommend one.
Can I do the work myself?
Usually lenders want the work done by a qualified contractor with detailed written bids. Rules vary by program and lender, so tell me what you have in mind and I'll check what's allowed before you plan around it.
Can I use a renovation loan on a home I already own?
Yes. Both the FHA 203(k) and HomeStyle have refinance versions that can replace your current mortgage and fund eligible improvements. If you want to keep your existing first mortgage, we can compare that with a HELOC or other options.
How is the home appraised if it needs work?
The appraisal generally looks at the expected value of the home once the planned improvements are complete. That's one reason a clear, detailed scope of work matters.
Is a renovation loan slower than a regular mortgage?
There are more steps, like contractor bids and a review of the work, so it helps to start early. Getting those pieces lined up before you commit keeps the process moving and avoids surprises.
Related loan programs
Before you rule yourself out, let's run some numbers together. Strategic Mortgage compares multiple lenders and checks down payment assistance before you start shopping.
FHA financing offers more flexible credit and qualifying requirements, starting with a 520 or better credit score. Strategic Mortgage compares it with your other options.
I help eligible veterans, service members and surviving spouses use their VA benefit with a clear look at entitlement, funding fees, closing costs and the full payment.
Last updated October 21, 2026 · Reviewed by Ron Pippin, NMLS #218333. This page is educational and not a commitment to lend; program details change — ask for current figures.