Home Renovation Loan Austin | Joel Richardson
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Austin Home Renovation Loans

A home renovation loan is a great way to achieve the home you’ve always dreamed of. If you have an Austin (or elsewhere) home or investment property that you need to update, you can learn more about a home renovation loan and how you can finance your project with this helpful home renovation loan FAQ.

What Is a Home Renovation Loan?

A borrower can finance renovation or repair costs within her loan when she does a renovation loan. With this type of loan, a homeowner can have the costs of construction rolled into the loan. There are several types of mortgage options available.

Can a home renovation loan be part of a refinance?

Yes, you can do a home renovation loan as part of a refinance and can borrow up to 95% of the appraised value of the home, subject to completed renovations. That means that the appraiser will take the renovations into effect on the appraisal, so you get credit for the upgrades.

What type of repairs can be done?

Think cosmetic and safety. You cannot add square footage (adding square footage is considered a remodel). Structural repairs, like roofs and foundations, are allowed within reason. People generally repaint, replace counters and flooring, fix plumbing and HVAC issues, etc.

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Additional Home Renovation Loans FAQs

You can definitely do that. Like the refinance program above, the appraiser takes the upgrades into effect on the appraiser. You will close on the purchase of your new home per the purchase contract terms and add the construction terms to the transaction. While we process your loan, you gather bids from contractors and select one to do the work. We add the costs to the purchase price and then determine the loan amount per your program guidelines.

We have jumbo construction and renovation loan programs. Contact us to learn more about these programs.

No. Many investors, including FNMA and FHA, do not allow this as it can lead to potential fraud. Even if you are a licensed contractor, the construction funds must be disbursed to a legitimate third-party contractor(s).

In short, we offer FNMA, FHA, and a jumbo renovation product. FNMA’s Homestyle program allows renovations up to 95%; FHA allows repairs/renovation to 96.5% via the 203k programs and jumbo to 80% of the purchase price (plus construction costs) for purchases. The same percentages apply to refinances but we use the appraised value with improvements to be completed.

In short, yes. We can do a simple escrow holdback where the seller sets aside a portion of his proceeds to fund your renovation costs.