Property Eligibility
The property type, current condition, occupancy and planned work must fit the selected program.
Finance an eligible property and improvements together
Renovation Home Loans
A renovation mortgage may combine the purchase or refinance of an eligible property with approved improvement costs in one financing structure.
29 years of mortgage experienceComplete program comparisonClear review of costs and requirements
The short answer
How Does Renovation Financing Work?
Renovation financing can base the transaction on the property and approved improvements rather than requiring the work to be completed before closing. Approved renovation funds are generally held in a controlled account and released as eligible work is completed and verified.
The borrower must qualify for the complete loan amount. The lender also reviews the property, plans, contractor, bids, contingencies, permits, project timeline and expected as-completed value under the selected program.
Renovation funds are not a cash payment to use without controls. Draws, inspections, invoices, change orders and completion deadlines follow the program and renovation agreement.
Build the complete project file01 02 03 04 05 06
Six Parts of a Renovation Review
A realistic, well-documented plan helps connect the construction work to the mortgage structure.
Scope of Work
Detailed plans and specifications define what will be repaired, replaced or improved.
Contractor Review
Licensing, insurance, experience, bids and program-specific contractor requirements are evaluated.
Budget and Contingency
Labor, materials, permits, professional fees and required contingency reserves are included.
As-Completed Value
The appraisal may consider the property’s expected condition after the approved work is completed.
Timeline and Draws
Completion deadlines, inspections and staged disbursements shape project administration.
Choose the right structure
Purchase, Refinance and Separate Financing Serve Different Plans
Compare convenience, total cost, available equity and project control before choosing a path.
One mortgage structure
Renovation Mortgage
- Combines eligible property financing and approved improvements
- Uses program-controlled renovation funds
- Requires detailed project review before closing
- May reduce the need for separate improvement financing
Separate obligations
Mortgage Plus Other Financing
- Keeps the first mortgage separate from improvement funds
- May use cash, a home-equity product or other financing
- Terms, payments and qualification are separate
- Available equity and timing can limit the structure
Review the complete structure
Review the Entire Project—not Just the Construction Bid
- Purchase price or existing mortgage payoff
- Approved repair and improvement costs
- Contingency reserve and professional fees
- Permit, inspection and draw requirements
- As-completed property value
- Rate, loan term and complete payment
- Cash needed and reserves after closing
- Expected project and occupancy timeline
Ask before you decide
Is the Project Ready for Mortgage Financing?
A renovation loan works best when the plans, participants, budget and timeline are sufficiently developed for a complete review.
- Is the planned work eligible under the selected program?
- Are detailed bids and specifications available?
- Does the contractor meet lender and program requirements?
- Is the contingency sufficient for the property and project?
- Can the borrower manage temporary housing or payment needs during work?
The review processStep 1 Step 2 Step 3 Step 4 Step 5
From Project Plan to Completed Renovation
The mortgage closing is one stage of a process that continues through construction and final completion.
Define the Project
Identify eligible work, occupancy, priorities, budget and desired completion date.
Build the File
Collect plans, bids, contractor information, permits and supporting financial documents.
Appraise and Underwrite
Review the property, as-completed value, borrower qualification and complete transaction.
Close and Fund
Complete the mortgage closing and establish the controlled renovation account.
Complete the Work
Use draws, inspections and documentation to finish the approved project within requirements.
Continue your research
Related Mortgage Guides
Construction Loans
Understand staged funding, project review, draws and construction documentation.
Explore Construction Financing →Conventional Loans
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Explore Conventional Loans →Loan Programs FAQ
Get plain-language answers about documentation, costs, eligibility and program comparisons.
Read the Loan Program FAQ →Start with the property and project
Ready to Review Renovation Loan Options?
Start with a conversation about the property, planned improvements, contractor, budget and expected timeline.