Rehab Loan
A rehab loan finances the purchase and the renovation together, based on what the home will be worth once the work is done. It is how a tired house at the right price becomes the right house.
In plain language
Instead of borrowing against what the property is worth today, a rehab loan is underwritten on the after-repair value. The renovation budget is held and released to the contractor in draws as the work is completed.
This replaces the usual sequence of a mortgage plus a credit card or a personal loan for the work, which costs far more and rarely covers a real renovation.
This is probably you if
- You have found a home in the right neighbourhood that needs real work
- A property was rejected by a standard appraisal for condition
- You are looking at an investment property that needs updating before it earns
Three steps, in order
- We agree a scope of work with a licensed contractor and get it costed properly. This is the step everything else hangs on.
- The appraiser values the home as it will be when the work is finished, not as it is today.
- You close on the purchase, and the renovation funds are released in stages as each part of the work is inspected and signed off.
What people ask me
Generally no. These programmes require licensed contractors, because the lender is releasing money against inspected progress. If you are handy, the place to use it is on the things outside the financed scope.
Longer than a straight purchase, because the scope and the contractor have to be approved before closing. Plan on several extra weeks, and start the contractor conversation the day you go into contract.
That is why we build a contingency into the budget from the start. Overruns beyond it come out of pocket, so an honest scope at the beginning is worth more than an optimistic one.
Worth a look while you are here
Fixed Rate Mortgage
One payment, one rate, for the whole loan. The default for a reason.
Read moreFHA Home Loan
A lower bar to clear. Built for buyers with a smaller down payment or a shorter credit history.
Read moreVA Home Loan
No down payment, no monthly mortgage insurance. The strongest loan in the country, if you earned it.
Read moreThink Rehab Loan might be the one
Let us confirm it against your actual numbers before you fall in love with a house.