Frequently Asked Questions

How long will it take to close a renovation mortgage?

The national average is somewhere between 45-60 days. Our average close time is actually between 30-45 days. 

How do I qualify?

This depends on your individual circumstance.  Part of what we do is analyze your home ownership goals and your financial standing, and advise you on which loan program is best for you.

What down payment is required?

FHA 203k loans require 3.5% down for 1-4 unit properties.  On a primary residence, Fannie Mae HomeStyle Renovation loans require 5% down for single family homes.  15% down is required for 2 unit properties, and a 25% down payment is required for 3-4 unit properties.

What is the minimum credit score required?

The minimum credit score for a HomeStyle loan and an FHA 203(k) is 620.  

Is there a lot of paperwork?

Yes.  The loan process is more document intensive than a normal loan.  

Which loan is right for me, a Fannie Mae HomeStyle Mortgage or a FHA 203(k) loan?

This depends on your individual circumstance.  Part of what we do is analyze your home ownership goals and your financial standing, and advise you on which loan program is best for you.

Are renovation loans like HomeStyle & 203(k) more difficult loans to close?

For most lenders, yes.  Renovation loans require much more documentation--from both the borrowers and the parties involved, And there's a lot more parties involved in these transactions that aren't involved in a "normal" transaction.  Your lender serves as the quarterback, and is responsible for coordinating realtors, the HUD consultant, contractors, title, escrow, appraisers, and a host of others. Successfully closing renovation loans in a timely manner requires an expertise in these types of loans.  Most lenders just aren't familiar with them, nor have they closed one in the past.

Can I knock down a home and rebuild?

No.  You cannot tear down a home and rebuild

Can I buy and rehab an investment property?

Yes.  You can buy an investment property with a Fannie Mae HomeStyle Renovation mortgage.  Investment properties require 15% down.  2-4 unit properties require 25% down.  You cannot use a FHA 203(k) loan for an investment property.

Can I convert my garage into an Accessory Dwelling Unit or Granny Flat?

This is an interesting question and the answer is, "It depends." The key to renovating, is that the renovations must add value. In some circumstances, converting a garage would actually decrease the value of the home.  In this instance, the conversion would not be allowed. However, in other circumstances, converting the garage would add value.  Garage conversions are case-by-case.

What type of properties qualify for 203(k) and HomeStyle Loans?

Single Family Homes, Condos, and 2-4 unit properties are eligible for financing.  If youre using a FHA 203(k) loan, the property needs to be a primary residence.  With a Fannie Mae HomeStyle loan, you can actually purchase a 2nd home or an investment property, and renovate it.

Can I make additions to the property?

Yes, you can make property additions. Some of the most popular additions are bathrooms, deck, garage, and a master suite.

Yes.  If a home is a short sale or a foreclosure you can buy it.  The home will need to meet minimum requirements for habitability at the time that the renovations are complete.

Can I buy a short sale or foreclosure with a renovation loan?

Can I complete unpermitted additions?

Yes, but the unpermitted addition will need to be permitted. The cost of permitting must be wrapped into the loan amount and the borrower cannot pay out-of-pocket for any required permits.

Can I do some of the remodeling myself?

Homeowners can get into the act with DIY repairs through the HomeStyle Renovation Loan. However, DIY Projects can only be performed on single unit properties, and the repairs being done by the homeowner must be approved by the lender. The repairs cannot exceed 10% of the "As Completed Value." Homeowners cannot be compensated for their work.  Inspections are required for work items in excess of $5,000.

Can I add units to the property if zoning permits?

You are not allowed to add additional units through the renovation loan, even if the zoning allows for it.

Am I required to have a HUD Consultant?

Yes, on all renovation loans a HUD consultant  is required.  The HUD consultant is the person who ultimately signs off on the project.  The HUD consultant is also in charge of the draw schedule. On 203(k) loans a HUD consultant will get involved very early, and will create a work write-up and review the contractors bid at the beginning of the process.  For HomeStyle loans, the HUD consultant isn't typically involved until the draw period.  

How long do I have to decide on the materials and remodeling that I want to do?

It's imperative that buyers are decisive regarding renovations and materials, and move quickly.  Much of this can be decided before an offer is even placed, and the remainder should be decided within a few days of an accepted offer.  We will guide you here,  The contractor, consultant, appraiser, and lender are waiting for your decision,

Can I buy a 2nd home with a renovation loan?

Yes.  For a second home the minimum down payment is 10% on a 30 year fixed loan.

How should I choose my contractor?

A referral is always a great start.  It's hugely advantageous if they have gone through this process already.  They need to be financially solvent, great communicators, and good with paperwork.  We will want them to hop on a phone call with us prior to starting

How can I vet my contractor?

Check online for reviews.  Ask for personal references.  You can ask to see financial reserves.  You can ask to see a credit report.  You can check civil records online.

My realtor said that my offer won't get accepted, is this true?

No.  There are strengths and weaknesses to every offer.  We work with real estate agents who are professionals, and understand the strengths of you as a buyer, and the strengths of renovation mortgages. If your realtor tells you that your offer will not be accepted, we are happy to provide you a realtor that can get your offer accepted.  

My lender said that there is too much paperwork and too much hassle, is this true?

I'll ask you.  Is paperwork, documentation, and a little hassle worth stopping you from buying a fixer upper and renovating it into your dream home? 

Is this loan more expensive than "normal" loans?

Yes.  Slightly.  Closing costs are typically more expensive.  Interest rates, however, are usually pretty close to the "normal" 30 year fixed rate.  But, it's an incredible loan.  How else would you ever get the funds to renovate at this scale?

How much are closing costs?

For a "normal" loan we always  suggest that clients have 2-3% of the purchase available for closing costs to cover third party costs.  With a Renovation Loan we suggest that buyers are prepared for slightly more closing costs,  3-4% of the purchase price.  This is money that you will need to have available at close of escrow. 

Are gift funds allowed?

Yes.  Gift funds are allowed from family members.

Can gift funds be used for down payment and closing costs?


Can the seller pay my closing costs?

Yes.  You can get a seller credit of up to 3% of the purchase price to go towards closing costs.

What is a contingency fund?

A contingency fund is reserves set aside equal to 10% of your total cost of repairs.  These funds are set aside for unforeseen repairs or deficiencies that may come up during the renovation process. 

How do I determine my down payment?

Say for example, a buyer wanted a 5% down payment.  The minimum down payment is determined as follows:  Purchase Price + Cost of Renovations = After Repair Value.  After Repair Value x 5% = Down Payment 

Can I use the loan to purchase energy efficient upgrades, such as solar panels?


Can I use a renovation loan to refinance?

Yes, you can use up to 50% of the As-Completed appraised value for renovations.  Keep in mind that you cannot take any cash-out with a HomeStyle or 203(k) loan.  You can only renovate the home.

Can I tear down an old garage and rebuild it?

No.  You cannot tear down and build from scratch.  You can renovate an old garage.  You can also add a garage as long as zoning permits.

Can I build a detached garage?

Yes!  If zoning permits and there is no other garage.

Can I add a pool?

With a HomeStyle loan, yes!

Can I purchase a condo with a renovation loan?

Yes.  But, this can prove to be a bit tricky because in order to purchase a home with a renovation loan, the renovations need to be approved by the HOA.  And if you don't own the condo, it's tough to get the plans approved!  One way which we've seen this done, is that the seller can actually present your renovation improvement plan to the HOA board. 

How is renovating a condo different than renovating a home?

It's important to remember that condos are governed by CC&R's.  These CC&R's may limit what type of repairs and renovations you are able to make, and when you are able to make them.  Before starting any type of renovation financing, its imperative to get approval from the HOA, to ensure that your renovations abide by the CC&R's.  

I have a family member who is a contractor, can we use them?

You will not be able to use a family member, employer, or previous employer to be the contractor.  

I am buying a home from a family member.  Can I use a renovation loan?

This type of sale is considered an Identity of Interest and is not eligible for HomeStyle financing.  You can use 203(k) financing if you wish to purchase a property from a family member. 

How is a home appraised when a buyer is using renovation financing?

The appraiser will inspect the property in its current condition, however he will also have the bid from the contractor showing the work that is going to be performed as part of the renovation.  The appraiser will then use the combination of  information gathered from walking the property, and the work to be completed, to determine an After Repair Value.  The appraiser will use comparable renovated properties in the area to support his value.

What happens if the appraisal comes in low?

If the appraisal comes in low on a HomeStyle loan, the buyer may have to come in with a larger down payment.  The maximum loan amount is based on the lessor of the "as completed" appraised value, or the purchase price + renovation cost. With a 203(k) loan you are allowed to go up to 110% of the appraised value if the purchase price + renovation costs exceed the appraisal.  

What if I can't live in the home while it is being renovated?

You have the option of financing up to 6 months of your mortgage payment into the renovation cost.

Can I buy and install new appliances?

When you are renovating a room, you can include appliances in the renovation costs.  However, the appliances have to be a part of an overall remodel of that room.  You cannot just go out and buy a new refrigerator to stick in the existing kitchen, or a new washer/dryer to throw in the garage.  You have to be remodeling that room.  You are not required to put the lime green refrigerator back into the upgraded kitchen! 

Can I buy new furniture to furnish the home?

No.  You cannot buy personal property

What is a holdback fund?

This is money that is being set aside from each draw that your contractor takes.  With each draw, the contractor will receive 90% of the draw amount.  That other 10% will be set aside and will be paid to the contractor in the final draw, once all work is complete and the property's title is clear of any liens. 

What is a feasability study?

This is a study that is performed by the HUD Consultant by reviewing the bids and assessing the practicality of the proposed plan.  These are not required for FNMA HomeStyle. 

If I'm buying a multi-unit, can I use rental income from the other units to offset my mortgage payment?

Yes, you can use the rental income to qualify.  So for example, if you are moving into one unit, and planning on moving a tenant into the other vacant unit, you can use 75% of the projected rent as income.

How long will it take for the remodel to be completed?

This is a question for your contractor.  It will vary based on his availability, the renovations you are undertaking, and how smooth the project goes.  This loan program is set up for the work to be completed within 6 months.

Can I have a non-occupant co-borrower?


What qualities are important to look for in a contractor?

Detail oriented.  Proficient with paperwork.  Great communicator.

What if I had a short sale or a foreclosure in the past?

For FHA 203(k) loans, the waiting period is 3 years for a short sale and foreclosure.  For a Fannie Mae HomeStyle loan, 4 years is the required waiting period after a short sale, and 7 years for a foreclosure.

How do I choose my HUD consultant?

HUD consultants can be found online: 

How do I apply?

There are a few different ways.  You can call or email.  You can also drop your information into a Contact Form on this site.  When you hit "Submit," our Renovation Loan specialists receive your inquiry within 1 minute.  So don't be surprised if you get a quick reply!  

OneTrust Home Loans is trade name of the legal entity, CalCon Mutual Mortgage LLC, a Delaware LLC (NMLS #46375). The OneTrust name has been registered in most states where CalCon operates, and in those states where it is not registered, we operate as CalCon. Equal Housing Lender. Matt Glynn NMLS #845662 / Matt Mounier NMLS #1378630 

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