Understanding Renovation Loans

Renovation loans are a type of loan that is designed to provide money for investors that want to fix up a property. These loans are also referred to as rehab loans. Here are the basics of renovation loans and how they work. 

Renovation Loans

With most traditional loans, you are only going to be able to get financing if the condition of the property is in good shape before you buy it. With a renovation loan, this is not the case. They are going to give you some of the funds in order to fix up the property before the permanent financing kicks in.

FHA 203k Rehab Program

One of the most popular types of renovation loans is the FHA 203K rehab loan. This is a loan that you can get through any traditional lender that works with the FHA. The FHA is going to back the loan which means that it will be easier for you to get approved even if you have a questionable credit score. This program is designed to purchase and fix up 1 to 4 family dwellings. In order to qualify, you will have to perform the required repairs according to the 203k program guidelines. 

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