Buy the fixer. Finance the fix. One loan.
Roll the purchase price and renovation costs into a single mortgage instead of scrambling for a second loan after closing.
A renovation loan is a single mortgage that combines the purchase price of a home with the cost of fixing it up, based on the home's projected value after the work is done. The two most common options are the FHA 203k loan and the conventional HomeStyle renovation loan.
With an FHA 203k loan in Texas, from older central Austin neighborhoods to fixer-uppers statewide, you can buy a property that needs work and finance the renovation in one closing instead of taking out a separate loan afterward.
Overview
You found a house with good bones but dated everything. Or it needs real work. New roof. Updated systems. A full kitchen gut. Renovation loans let you finance the purchase and the rehab together in one mortgage, based on the projected value after improvements.
That means you can buy a property other buyers are passing on and finance the work to make it exactly what you want. One loan. One closing. The contractor gets paid through a draw process as the work gets completed and inspected.
These loans have more moving parts than a standard purchase. Contractor bids. Inspections. Draw schedules. Consultant involvement on bigger projects. That's exactly why you want one person coordinating everything.
Key Details
How I handle Texas renovation loan files
I look at the property and the scope of work first. Determine whether it's a limited or standard fit. Review contractor bids. Price the loan. Then manage the draw process once the work starts.
The coordination between you, the contractor, the inspector, and the lender is where these files get complicated. I keep it organized so the work doesn't stall waiting on money. Building from the ground up instead of renovating? See construction loans.
Questions I Get
What's the difference between limited and standard?
Limited covers smaller cosmetic projects under a set dollar amount. No structural work, no consultant. Standard covers big renovations including structural, additions, and full rehabs. Requires a HUD consultant.
Can I do the work myself?
Generally no. Most programs require licensed contractors. Some exceptions exist for non-structural work, but the vast majority needs professional contractors.
How is the loan amount determined?
Purchase price plus renovation cost, subject to program loan limits. The appraiser provides a projected "after-improved" value.
How long does the renovation need to be done?
Limited is typically about six months. Standard may allow up to a year. I set the timeline expectation at the start.
What is a 203k loan?
An FHA 203k loan is a government-backed renovation mortgage that lets you finance both the purchase of a home and the cost of repairs or improvements in one loan. It's built for properties that need work to meet livable standards or that a buyer simply wants to update, and it follows FHA's flexible qualifying guidelines.
What is the difference between an FHA 203k loan and a HomeStyle renovation loan?
The FHA 203k loan is backed by FHA and follows FHA's more flexible credit and qualifying rules, which makes it a common fit for buyers with thinner files. The HomeStyle renovation loan is a conventional product and tends to allow a wider range of property types and renovation work, including some projects 203k won't cover. I compare both against your property and your situation to find the better match.
Who qualifies for a renovation loan in Texas?
Renovation loans in Texas are open to buyers purchasing a primary home that needs work, and HomeStyle can extend to certain second homes and investment properties. You'll need qualifying income, an acceptable credit profile, and a property the appraiser can value based on the planned improvements. I review your numbers up front so you know where you stand before you make an offer.
What credit score do I need for an FHA 203k loan?
There's no single number I can quote, because pricing and approval depend on the full picture, not one score. Credit profile affects lender options on both 203k and HomeStyle. If your credit needs work first, I'll tell you honestly and point you toward improving your credit score before we move forward.
Can I refinance into a renovation loan to fix up a home I already own?
Yes. Both FHA 203k and HomeStyle can be used as a refinance, rolling your current balance and the renovation budget into one new loan based on the after-improved value. In Texas, cash-out refinancing carries extra rules under Section 50(a)(6), so I walk you through how those constraints apply to your renovation plans.
How does a renovation loan work?
You start with a property and a scope of work, and the appraiser values the home based on its projected condition after the improvements. The purchase price and the renovation budget combine into one mortgage at one closing. After closing, the renovation funds are held back and released to your contractor through a draw process as the work is completed and inspected, so the money is tied to actual progress rather than paid out all at once.
What work can a renovation loan cover?
It depends on the program, but renovation loans can cover a wide range of work: kitchen and bath remodels, roofing, flooring, windows, updated plumbing, electrical, and HVAC systems, and on the standard 203k or HomeStyle, structural repairs and room additions. The limited tier is meant for smaller, non-structural projects, while the standard tier handles major rehabs. Luxury items and most do-it-yourself labor generally don't qualify, and I confirm what your specific scope allows before you commit.
Found a diamond in the rough?
Send me the listing and a rough scope of work. I'll tell you whether a renovation loan makes sense for the deal.