What Is a Rehab Loan?

A rehab loan allows you to finance both the purchase of a home and the cost of renovations with a single mortgage. It’s designed for buyers looking to transform a property that needs work — without the need for multiple loans or second mortgages.

At Lendmire, we offer both FHA 203(k) and Conventional Renovation Loans, helping you fund essential repairs or improvements while building equity from day one.

FHA 203(k) Renovation Loan

The FHA 203(k) loan, insured by the Federal Housing Administration, is built for buyers purchasing a primary residence that needs repairs or upgrades.

Highlights:

• Combines home purchase and renovation costs in one loan

• Covers a wide range of repairs, from roofing to kitchens to flooring

• Funds are held in escrow and disbursed as work is completed

• Requires licensed contractor bids and FHA appraisal

• Available for owner-occupied primary residences only

FHA 203(k) LTV Guidelines:

• Finance up to 96.5% LTV based on the lesser of:

  • The purchase price plus renovation costs, or

  • The “as-completed” appraised value

All FHA 203(k) loans must meet HUD guidelines. Mortgage insurance and property eligibility apply.

Conventional Renovation Loan

Conventional rehab loans, like Fannie Mae HomeStyle®, also allow borrowers to finance purchase and renovation costs together — with flexible options for primary residences.

Highlights:

• Broad renovation flexibility — cosmetic or structural

• Funds disbursed through escrow as work is completed

• Requires licensed contractor estimates and final “as-completed” appraisal

• Primary residence occupancy required

Conventional Rehab LTV Guidelines:

• Up to 97% LTV for first-time homebuyers purchasing a primary residence

• Up to 95% LTV for other primary residence buyers

• LTV is based on the as-completed value and renovation budget

Must meet Fannie Mae HomeStyle® eligibility. First-time buyer status required for 97% LTV.

How Rehab Loans Work

• One closing covers both home and renovation financing

• You’ll provide renovation plans, licensed contractor bids, and cost estimates

• The lender holds renovation funds in escrow and releases them during construction

• Many programs allow early payoff with no penalty

Why Lendmire?

At Lendmire, we make renovation financing smooth and stress-free. Our mortgage team helps coordinate everything from contractor paperwork to closing — so you can focus on building the home you’ve envisioned.

Compliance Notice

Lendmire complies with all federal and state mortgage regulations. Loan terms, LTV limits, and availability are subject to borrower eligibility, property type, and underwriting approval. A Loan Estimate (LE) will be provided after completion of a full application and required documentation.