Rehab & Renovation Loans: Finance Purchase + Repairs in One Loan
Found a fixer-upper with great bones? Don't let renovation costs stop you. Combine your purchase and improvement costs into a single mortgage with one closing and one monthly payment.
How Rehab Loans Work
Instead of getting a mortgage and a separate construction loan, rehab loans combine everything into one.
Find Your Property
Identify a home that needs work—foreclosure, estate sale, or just dated.
Get Contractor Bids
Work with licensed contractors to estimate renovation costs.
One Loan, One Close
Finance purchase + repairs in a single mortgage based on after-repair value.
Complete Renovations
Contractors are paid in draws as work progresses. You move in when done.
Compare 4 Rehab Loan Programs
Each program has different eligibility requirements, down payments, and benefits. Here's how they compare.
Conventional (HomeStyle)
Backed by Fannie Mae
Max LTV
97%
Min Down
3%
Min Credit
Per DU
Max DTI
Per DU
Eligibility
- Occupancy: Primary, Second Home, Investment
- Property Types: 1-4 units, Manufactured, Condos
- Rehab Period: Up to 10 months
Key Benefits
- Investment & second homes eligible
- Luxury improvements allowed (pools, etc.)
- HomeReady option for low-moderate income
Best For: Buyers with good credit who want flexibility—including second homes and investment properties.
FHA (203k)
Backed by HUD/FHA
Max LTV
96.5%
Min Down
3.5%
Min Credit
620
Max DTI
55%
Eligibility
- Occupancy: Primary Residence Only
- Property Types: 1-4 units, Manufactured
- Rehab Period: Up to 6 months
Key Benefits
- Lower credit score requirements
- Limited version for repairs under $35K
- Standard version for major renovations
Best For: First-time buyers or those with lower credit who need flexible qualification.
USDA Rural Rehab
Backed by USDA Rural Development
Max LTV
100%
Min Down
0%
Min Credit
620
Max DTI
29/41%
Eligibility
- Occupancy: Primary Residence Only
- Property Types: SFR, PUD (Rural areas only)
- Rehab Period: Up to 6 months
Key Benefits
- Zero down payment required
- Income limits (≤115% AMI)
- Most of rural America qualifies
Best For: Low-to-moderate income buyers in rural areas who want zero down payment.
VA Renovation
Backed by VA (Veterans Affairs)
Max LTV
100%
Min Down
0%
Min Credit
620
Max DTI
Per AUS (50% manual)
Eligibility
- Occupancy: Primary Residence Only
- Property Types: 1-4 units, Manufactured
- Rehab Period: Up to 6 months
Key Benefits
- Zero down payment with full entitlement
- No PMI—only VA funding fee
- Jumbo options available
Best For: Veterans and active-duty service members who want zero down and no PMI.
Side-by-Side Comparison
| Feature | HomeStyle | FHA 203k | USDA | VA |
|---|---|---|---|---|
| Min Down Payment | 3% | 3.5% | 0% | 0% |
| Investment Property | ✓ | ✗ | ✗ | ✗ |
| Second Home | ✓ | ✗ | ✗ | ✗ |
| Max Rehab Period | 10 months | 6 months | 6 months | 6 months |
| Luxury Improvements | ✓ (pools, etc.) | ✗ | ✗ | ✗ |
| Limited Option (<$35K) | ✓ | ✓ | ✓ | ✗ |
| Income Limits | None* | None | ≤115% AMI | None |
| Geographic Limits | None | None | Rural only | None |
| Eligibility | Anyone | Anyone | Income-qualified | Veterans only |
*HomeReady has income limits for enhanced benefits
Rehab Loan Calculator
Estimate your project costs, loan amount, monthly payment, and instant equity position.
Property Values
Renovation Budget
Lenders typically require 10-20% contingency for unexpected costs
Loan Terms
FHA 203k: 3.5% | Conventional: 3-5% | VA/USDA: 0%
Project Summary
Total Project Cost
$336,250
Loan Amount
$319,438
Add ~$300-500/mo for taxes, insurance & PMI/MI
Equity Analysis: Build Wealth Through Renovation
LTV on Cost
95.0%
Max varies by program
LTV on ARV
85.2%
<80% = No PMI potential
Instant Equity
$55,563
14.8% equity position
ROI on Down Payment
+230%
Equity gained vs cash in
💰 By investing $16,813 down and completing $86,250 in renovations, you'll create $55,563 in instant equity—a 230% return on your down payment!
Project Cost Breakdown
Free Rehab Loan Worksheet
Download our comprehensive renovation budget worksheet. Includes cost estimator, program comparison checklist, contractor bid template, and draw schedule tracker.
Download PDF WorksheetWhy Work With Me for Rehab Loans?
Renovation loans are more complex than standard mortgages. Here's why that matters.
All 4 Programs Available
I offer HomeStyle, FHA 203k, USDA, and VA rehab loans—so we can match you with the best fit, not just what one lender offers.
Contractor Coordination
I work with your contractors on bid formatting, draw schedules, and lender requirements so nothing delays your project.
Maximize Your Equity
Strategic renovation financing builds instant equity. I help you structure deals that create wealth, not just shelter.
State-Specific Rehab Loan Pages
Looking for rehab loans in a specific state? Check out our dedicated pages:
Ready to Finance Your Renovation?
Whether you're buying a fixer-upper, renovating your current home, or investing in a rehab project, I'll help you find the right program and structure the financing.
Expert reviewed by
Emmett Clark, NMLS #233747
20+ years mortgage experience
Last updated: January 2026
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