Fix up your fixer upper home with a Rehab Loan. If you have found the perfect home but it needs renovation, you can purchase the home and roll the costs of the renovation into your loan.
An FHA 203(k) Loan, also called a Renovation Loan, allows buyers to finance the cost of the home and the renovation in one mortgage with a low rate.
The VA also offers a similar option for military and veterans to purchase a home and finance the required renovations to bring it up to standards set by the VA.
Rehab loans have similar qualification requirements to a standard FHA or VA loan, with additional documentation needed related to the renovation.
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Frequently Asked Questions
What is a Rehab Loan?
A rehab loan, also known as an FHA 203(k) or renovation loan, allows homebuyers or homeowners to finance both the purchase (or refinance) of a property and the cost of repairs or renovations into a single mortgage.
Who might benefit from a rehab loan?
Rehab loans may be ideal for buyers interested in purchasing fixer-uppers or homeowners looking to update or improve their existing property without taking out separate financing for the renovations.
What types of repairs can be included in a rehab loan?
Depending on the loan type, eligible repairs can include anything from minor updates like flooring, paint, and appliances to major projects such as roofing, structural repairs, room additions, or energy-efficient upgrades.
What are the main types of rehab loans?
The FHA 203(k) program has two main options: the Limited 203(k), which covers smaller repairs typically under $35,000, and the Standard 203(k), which is used for larger renovation projects that may involve structural work.
Can a rehab loan be used for investment properties?
Most FHA 203(k) rehab loans are intended for owner-occupied properties, not investment or rental homes. However, other renovation loan programs may be available for investors through conventional financing options.
