Loan Program

Renovation Loans

Renovation loans finance a home and its repairs together, based on the after-improved value. FHA 203(k) and Fannie Mae HomeStyle are the two main routes, and they suit very different projects.

Based on

After-improved value

Down payment

3.5% (FHA 203k) / 5% (HomeStyle)

Credit minimum

620-640

Draws

Paid to contractor in stages

Best For

Buyers of dated or distressed homes
Owners planning a major remodel
Properties that fail standard appraisal conditions

How It Works

A licensed contractor bid establishes the renovation budget before closing
The appraiser values the home as if the work were already complete
Funds are held in escrow and released in draws as work is inspected
Limited 203(k) covers lighter cosmetic work; standard 203(k) and HomeStyle cover structural projects

Pros

One loan, one closing, one rate
Uses after-improved value
Makes unfinanceable homes financeable

Trade-offs

Longer timeline than a standard purchase
Contractor requirements are strict
More paperwork

Frequently Asked

Can I do the work myself?

Generally no. These programs require a licensed, insured contractor with a documented bid and draw schedule.

How long does a renovation loan take to close?

Plan on 40-50 days rather than 30, because the contractor bid and specialty appraisal add time up front.

Real-World Examples

How this program actually plays out.

Dated Santa Rosa home, kitchen and systems

A property that appraised low due to an original kitchen, aging electrical, and a roof near end of life.

Purchase price: $575,000
Renovation budget: $95,000
Loan based on: After-improved value
Down payment: 5%

Purchase and remodel closed in one loan at one rate, with no second financing or cash-out refinance needed later.

Examples are illustrative composites of typical files, not offers of credit or guarantees of terms. Your actual options depend on your credit, income, property, and current market pricing.

What Moves Your Rate

FHA versus conventional structure
Credit score and loan-to-value against after-improved value
Scope and complexity of the renovation

Documents You Will Need

Detailed contractor bid with a line-item scope of work
Contractor license and insurance documentation
Standard income and asset documentation
Plans or permits for structural work

Northern California Notes

How renovation loans work in our market.

Useful across older Bay Area housing stock where deferred maintenance blocks standard financing.
Fire-rebuild and hardening projects in Sonoma and Napa counties are frequent renovation-loan candidates.

San Francisco Marin County East Bay Sonoma County Napa County Sacramento

Is this the right program?

Have Mark run your numbers, no credit pull required.

Talk to Mark

Other Programs

Conventional Loans FHA Loans VA Loans USDA Rural Loans Jumbo Loans DSCR Investor Loans Bank Statement Loans Asset Depletion Loans ITIN Loans Fix & Flip / Bridge Loans HELOC & Equity Access Reverse Mortgages (HECM)