Fort Worth is full of older houses with good bones and a kitchen from 1978. A renovation loan lets you buy the house, or refinance the one you have, and roll the cost of the work into one mortgage. I do FHA 203(k), both Standard and Limited, plus Fannie Mae HomeStyle and Freddie Mac CHOICERenovation. Here's how each one works. I'm in Fort Worth, and most of my clients are around DFW.
I always start with a soft pull, so no hard credit ding.
You pick the house. A contractor bids the work. The appraisal looks at what the house will be worth once the work is done. At closing, the money for the work goes into an account and gets paid out in draws as the job moves along, with inspections to check the progress. When the work's finished, you have one mortgage and a house that's actually done.
That's the big win: you're not draining savings or running up a credit card to fix the place after you move in.
HUD's 203(k) program is the FHA version, so it comes with FHA's flexibility on credit and FHA's rules, including living in the home. It comes in two sizes.
For minor remodeling and nonstructural repairs. No 203(k) consultant required. HUD's list includes things like a new roof that doesn't touch the structure, plumbing, heating and AC, electrical, wells and septic, energy improvements, accessibility, new appliances, smoke detectors, and decks, patios, and porches. HUD caps the total repair cost and reviews it each year.
For bigger jobs, including structural work and major remodels. It requires a HUD-approved 203(k) consultant, who helps with the scope of work and the draw inspections. There's a minimum amount of work for the Standard, so small jobs go Limited.
If your credit and finances are strong, a conventional renovation loan may cost less, and it isn't limited to the same list of repairs.
Purchase or refinance, with the cost of the work in the loan. Per Fannie Mae, there are no required improvements and no restrictions on the type of renovation. Generally, the work has to be permanently attached to the house or land. Outdoor structures like garages, pools, and accessory units can be eligible where zoning allows. It can also finish a newly built home that's nearly done. No tear-downs. The work has to be done within a set time after closing.
Purchase or no-cash-out refinance, with the cost of the work in the loan. Per Freddie Mac, it covers repairs and remodels, adding or renovating an accessory dwelling unit, energy and resilience upgrades, disaster repairs, and outdoor structures like pools and decks. No razing the house to build a new one.
Renovation loans run on a written scope and contractor bids. Vague bids slow everything down. Get your contractor involved early, and make sure they're good with being paid in draws.
The house has to be worth enough once the work is done. Gold-plating a house in a neighborhood that won't support it doesn't work. I'll help you sanity-check the plan.
Old houses hide things. Plan for a contingency, because surprises in the walls are normal.
More paperwork means a longer path to closing than a regular purchase. Tell your Realtor you're using a renovation loan so the contract gives you enough time.
Building from scratch or tearing down? That's a construction loan. Buying or fixing up a manufactured home? Some renovation programs work there too, with extra rules.
Send the short form, call, or email, ideally before you write the offer. I'll tell you which renovation loan fits the house and the job, and whether the numbers work once the work's done.
I lend in Texas, Oklahoma, California, Colorado, Montana, Florida and Georgia, and I can help in all the other states too.
I always start with a soft pull, so no hard credit ding.
One mortgage that covers the house and the cost of fixing it up, on a purchase or a refinance. The repair money is held and paid out to the contractor as the work gets done, instead of handed to you at closing.
The Limited 203(k) is for minor remodeling and nonstructural repairs, and it doesn't require a 203(k) consultant. The Standard 203(k) handles bigger jobs, including structural work, and requires a HUD 203(k) consultant.
On Fannie Mae's HomeStyle Renovation and Freddie Mac's CHOICERenovation, outdoor structures like pools and accessory dwelling units can be eligible, as long as local zoning allows them. FHA's 203(k) has its own list of eligible improvements.
No. HomeStyle and CHOICERenovation don't allow tearing down the house and rebuilding. That's a construction loan.
Plan on using a contractor. Renovation loans want bids, a scope of work, and a contractor who'll get paid in draws. Tell me up front if you're planning to do any of it yourself.
It depends on the house, the size of the job, your credit, and whether it's your home or something else. FHA 203(k) is more forgiving on credit. HomeStyle and CHOICERenovation are conventional. I'll put them side by side.
I always start with a soft pull, so no hard credit ding.
General information, not a commitment to lend. Program rules come from HUD Handbook 4000.1, the Fannie Mae Selling Guide, and Freddie Mac's guide. HomeStyle is a Fannie Mae program and CHOICERenovation is a Freddie Mac program; neither company is affiliated with this site. Subject to qualification and program guidelines. Not all applicants will qualify.
More answers on the FAQ page, or see Fort Worth home loans. Or head back home.