Renovation and construction loans help you purchase, build, or remodel a home while also covering renovation costs in one financing plan. These programs may bundle the home and improvement costs into a single loan, making it easier to budget, upgrade, and create a home that fits your needs and lifestyle.
Renovation and construction loans are designed to finance the cost of home improvements, remodeling, or new home construction. These loans allow homeowners and buyers to upgrade, repair, or build properties with structured financing that releases funds in stages as work is completed.
These loans are ideal for homebuyers purchasing fixer-uppers, homeowners looking to renovate, and individuals building a custom home. Investors can also use these loans to rehab properties for resale or rental income.
Unlike traditional mortgages, renovation and construction loans provide funding in stages rather than a lump sum. Lenders disburse payments based on project milestones, ensuring that contractors and builders receive payments as work progresses.
Loan options include FHA 203(k) renovation loans, Fannie Mae HomeStyle loans, VA renovation loans, construction-to-permanent loans, and standalone construction loans. Each loan type has different requirements based on the scope of work, borrower qualifications, and loan terms.
These loans provide flexible financing for remodeling, home improvements, or new construction. Borrowers can increase their home’s value, customize their living space, and spread renovation costs over time instead of paying upfront.
If you’re looking to upgrade your home, purchase a fixer-upper, or finance a custom-built home, a renovation or construction loan may be the perfect solution. A mortgage specialist can help determine the best loan option for your project.
Jon Shrum, President of KMC Financial and Team Shrum, helps buyers and homeowners finance both the home and the improvements with one clear plan. He guides you through contractor bids, timelines, and loan options, and keeps the process organized from start to finish. With honest advice and close attention to detail, Jon makes building or renovating feel manageable.
Renovation and construction loans help buyers and homeowners fund a purchase, build, or remodel while covering renovation costs in the same financing plan. These FAQs explain how construction and renovation mortgages work, common program options, timelines, and what to expect so you can upgrade or build with confidence.
A renovation loan is a mortgage that includes funds to repair, remodel, or upgrade a home. Instead of getting separate financing, the renovation costs are bundled into the loan, which can simplify budgeting and reduce out of pocket expenses.
A construction loan provides financing to build a home from the ground up. Funds are typically released in stages, called draws, as construction milestones are completed. Some programs allow a one time close that converts to a permanent mortgage after the build.
Yes. Many buyers use renovation financing to purchase a home that needs repairs and fund the improvements at the same time. This can be a strong option when the home is not move in ready but has great potential.
Depending on the program, repairs may include kitchens, bathrooms, flooring, roofing, HVAC, windows, structural repairs, and energy efficient upgrades. Some programs also allow luxury improvements, while others focus on safety and livability.
Most programs require licensed contractors and detailed bids, timelines, and scope of work. Lenders want to see clear plans and costs before approval. Some loans allow limited DIY work, but it is usually restricted.
Timelines vary based on the scope and permitting, but these loans usually take longer than standard purchases because plans, bids, and appraisals must be reviewed. Many projects also have completion deadlines set by the loan program.
Down payments and rates may be higher than a traditional mortgage because the loan involves additional risk and oversight. Requirements depend on the program, your credit, and whether it is a renovation or new construction project.
