Renovation Loan (203k / HomeStyle)
Finance the home plus repairs based on the after-improved value.
How it works
A renovation loan finances home improvements based on the projected after-renovation value, letting you borrow more than current equity alone allows. Options include FHA 203(k) and conventional renovation products. It is ideal when you lack the equity today to fund a major remodel.
Key things to know
- Combined loan-to-value usually caps near 85% (cash-out refinance at 80%).
- A second lien keeps your first mortgage; a cash-out refinance replaces it.
- Compare the rate type — fixed (home equity loan) vs variable (HELOC).
- Budget for closing costs (often lower or waived on HELOCs).
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Frequently Asked Questions
- What is the renovation loan (203k / homestyle)?
- A renovation loan finances home improvements based on the projected after-renovation value, letting you borrow more than current equity alone allows. Options include FHA 203(k) and conventional renovation products. It is ideal when you lack the equity today to fund a major remodel.
- Will it affect my first mortgage?
- Only a cash-out refinance replaces your first mortgage. A HELOC, home equity loan, or second mortgage sits behind it and leaves that rate alone.