Finance the purchase of your next home and the cost of renovations in a single loan. One closing, one payment — based on the after-improved value of the property. FHA 203(k) from 3.5% down.
Buy a fixer-upper and transform it into your dream home — all financed in a single mortgage.
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One Loan, One Closing
Finance the purchase price and renovation costs in a single mortgage with one application, one closing, and one monthly payment.
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Low Down Payment
FHA 203(k) from just 3.5% down. Fannie Mae HomeStyle from 3–5%. Down payment is based on the total loan amount including renovation costs.
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Based on After-Improved Value
Your loan amount and LTV are calculated on what the home will be worth after renovation — not its current condition. Buy low, renovate, and build instant equity.
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Expand Your Search
Homes that need work are often priced below market. A renovation loan lets you see potential where others see problems — turning fixer-uppers into dream homes.
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Two Program Options
FHA 203(k) for government-backed low-down-payment financing, or Fannie Mae HomeStyle for conventional with no MIP and higher limits.
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Licensed & Inspected
Contractor oversight and draw inspections at every stage protect your investment and ensure the renovation is done right.
Eligibility
Who Qualifies for a Renovation Loan?
Renovation loans have specific requirements for the borrower, the property, and the contractor performing the work.
Property & Contractor Requirements
Property
Existing structure required (not vacant land)
FHA 203(k): owner-occupied primary residence, 1–4 units
HomeStyle: primary, second home, or investment, 1–4 units
Must meet minimum property standards after renovation
Contractor
Licensed contractor required for all renovation work
Contractor must provide detailed bids and scope of work
Lender reviews and approves contractor before closing
Renovation Scope
203(k) Limited: cosmetic/non-structural up to $35,000
203(k) Standard: major work, structural, no cap (above $35K)
HomeStyle: up to 75% of after-improved value, luxury OK
After-Improved Appraisal
Renovation loans require an as-improved appraisal that estimates what the property will be worth after all planned renovations are completed. Your loan amount, down payment, and LTV are based on this projected value.
Borrower Requirements
Credit Score
FHA 203(k): 580+ (3.5% down) or 500+ (10% down)
HomeStyle: 620+ for most programs
Higher scores may qualify for better rates
Down Payment
FHA 203(k): 3.5% minimum with 580+ credit
HomeStyle: 3–5% primary, 10% second home, 15–25% investment
Based on total loan amount (purchase + renovation)
Income & Employment
Stable, documented income with 2-year history
DTI ratio generally under 43% (FHA) or 45% (HomeStyle)
Reserves may be required depending on loan amount
Additional Requirements
10–20% contingency reserve required for cost overruns
HUD consultant required for 203(k) Standard only
Renovation must be completed within 6–12 months
FHA 203(k)
FHA 203(k) Renovation Loan
The most popular renovation loan — backed by FHA with low down payment requirements. For buyers purchasing a fixer-upper or homeowners refinancing to fund renovations. Two sub-programs cover everything from cosmetic updates to full gut rehabs.
203(k) Standard: Major structural work, room additions, full gut renovations. No max renovation limit (must exceed $35K). Requires HUD consultant.
203(k) Limited: Cosmetic and non-structural updates up to $35,000. No HUD consultant required. Kitchen, bath, flooring, paint, windows, HVAC, roof.
3.5% down payment — one of the lowest in renovation lending
Single closing for purchase + renovation in one mortgage
Purchase Price: $275,000 Renovation Budget: $75,000 After-Improved Value: $350,000 Down Payment (3.5%): $12,250 Total Loan Amount: $337,750
Buy below market, renovate to full value. Your down payment is just 3.5% of the total — and your LTV is based on what the home will be worth after renovation, not its current condition.
HomeStyle
Fannie Mae HomeStyle Renovation
A conventional renovation loan with no FHA mortgage insurance. Higher loan limits than FHA, luxury improvements allowed, and PMI can be removed once you reach 20% equity. HomeStyle is the go-to option for borrowers who want more flexibility and lower long-term costs.
3–5% down for primary residences (conventional guidelines)
No dollar cap on renovation (up to 75% of after-improved value)
• You have a lower credit score (580+)
• You want the lowest down payment (3.5%)
• Your renovation is under FHA loan limits
Choose HomeStyle when:
• You want to avoid permanent FHA MIP
• You need higher loan limits or luxury improvements
• The property is a second home or investment
• You want PMI removed at 20% equity
Not sure which program is right for you? Our renovation loan specialists will compare both options and recommend the best fit. Schedule a consultation →
How It Works
How a Renovation Loan Works
A renovation loan follows a structured lifecycle from property search through project completion. Here is the step-by-step process:
Find a property — Identify a home with renovation potential
Get contractor bids — Licensed contractor provides detailed scope and cost
Apply for renovation loan — Submit application with contractor bids and renovation plans
After-improved appraisal — Appraiser values the home based on planned improvements
Close the loan — Single closing covers purchase + renovation funds
Renovation begins — Contractor starts work per approved scope
Draws paid to contractor — Funds released as work is completed and inspected
Final inspection — Property verified as complete, meeting all standards
Purchase Price: $275,000 + Renovation Budget: $75,000 = After-Improved Value: $350,000 Down Payment (3.5%): $12,250 Total Financed: $337,750
You buy a home for $275K, invest $75K in renovations, and the home is now worth $350K. You put down just $12,250 and immediately have equity in a home that is exactly how you want it.
Renovation funds are held in escrow and released to your contractor as work is completed and inspected. You never handle the renovation funds directly — this protects you and the lender.
Costs & Fees
Understanding Renovation Loan Costs
Here's what to expect in terms of costs when financing a home purchase with renovations.
Cost
Typical Amount
Notes
Down Payment
3.5% (FHA) / 3–5% (Conv)
Based on total loan amount (purchase + renovation)
Origination Fee
0.5 – 1% of loan amount
Standard mortgage origination
FHA MIP (if 203k)
1.75% upfront + 0.55%/yr
Required on FHA 203(k) loans
As-Improved Appraisal
$500 – $1,000
Appraisal based on after-improved value
HUD Consultant (Standard 203k)
$800 – $1,500
Required for 203(k) Standard only
Title & Escrow
$1,000 – $3,000
Varies by state
Inspection Fees
$300 – $500 per draw
Multiple inspections during renovation
Contingency Reserve
10 – 20% of reno budget
Required reserve for cost overruns
Total Closing Costs
3 – 6% of loan amount
In addition to down payment
One Loan Saves You Money
With a renovation loan, you finance the purchase and renovation in one mortgage with one set of closing costs. Without a renovation loan, you would need to buy the home first, then take out a separate home equity loan or HELOC to fund renovations — two closings, two sets of fees, and higher total costs.
Note: Actual costs vary by location, renovation scope, and loan program. Your loan officer will provide a detailed Loan Estimate with all costs before closing.
Loan Comparison
Renovation Loan vs. Construction Loan
Renovating an existing home versus building from scratch — here's how they compare.
Estimates only. Does not include FHA MIP or PMI. Actual rates and payments will vary based on credit, income, and property. Subject to credit approval.
The Process
Your Renovation Loan Journey
From finding the right property to moving into your renovated home, here's what to expect.
1
Find Property & Get Contractor Bids
2–4 Weeks
Get pre-qualified with Texana Bank using a soft credit check. Find a property with renovation potential, then work with a licensed contractor to develop detailed bids and a scope of work for the planned improvements.
2
Loan Approval & Closing
4–6 Weeks
We order the as-improved appraisal, review contractor bids, assign a HUD consultant (if 203(k) Standard), and underwrite the loan. You close once — covering both the purchase and renovation in a single mortgage.
3
Renovation Phase
3–6 Months
Your contractor begins work per the approved scope. Renovation funds are held in escrow and released in draws as work is completed and inspected. You make regular mortgage payments during this phase.
4
Final Inspection & Move In
1–2 Weeks
Once all renovations are complete, a final inspection verifies the work meets standards. Any unused contingency reserve is applied to reduce your loan balance. Your home is ready — move in and enjoy.
Frequently Asked Questions
Renovation Loan FAQs
Answers to the most common questions about renovation loans, FHA 203(k), HomeStyle, contractor requirements, and the draw process.
No. Texana Bank Mortgage uses a soft credit inquiry for pre-qualification, which has absolutely no impact on your credit score. You can check your eligibility, explore renovation loan options, and get pre-approved without any effect on your credit. A hard inquiry only occurs later if you formally move forward with a full application.
A renovation loan lets you finance the purchase of a home and the cost of renovations in a single mortgage. Instead of buying a home and then taking out a separate loan for improvements, a renovation loan rolls everything into one loan with one closing. Your loan amount is based on the after-improved value of the property, not its current condition.
The FHA 203(k) Standard is for major renovations with no dollar cap on renovation costs (must exceed $35,000). It requires a HUD consultant and covers structural work, room additions, and full gut rehabs. The 203(k) Limited is for cosmetic and non-structural updates up to $35,000 — kitchen, bath, flooring, paint, windows, HVAC, and roof — with no HUD consultant required.
The HomeStyle renovation loan is a conventional alternative to FHA 203(k). It has no FHA mortgage insurance, offers higher loan limits, allows luxury improvements like pools and outdoor kitchens, and can be used for primary residences, second homes, or investment properties. Down payments start at 3–5% and PMI can be removed once you reach 20% equity.
With FHA 203(k) Limited, renovation costs can be up to $35,000. With FHA 203(k) Standard, there is no dollar cap as long as the total loan stays within FHA county limits. With HomeStyle, renovation costs can be up to 75% of the after-improved appraised value, with no set dollar cap on the renovation portion.
An after-improved (or as-improved) appraisal estimates what the property will be worth after all planned renovations are completed. This is different from a standard appraisal that values the home in its current condition. Your loan amount, down payment, and LTV ratio are all based on this projected after-improved value.
Yes. Both FHA 203(k) and HomeStyle renovation loans require a licensed contractor to perform the work. The contractor must provide detailed bids, a scope of work, and a timeline. The lender reviews and approves the contractor before closing. This protects you by ensuring qualified professionals handle the renovations.
Generally, no. Renovation loans require licensed contractors to perform the work. Some programs may allow limited owner-performed work (such as painting) if you can demonstrate the skills, but the vast majority of the renovation must be completed by licensed professionals. All work is subject to inspection before draw funds are released.
Allowed renovations include kitchen and bathroom remodels, flooring, roofing, windows, HVAC, plumbing, electrical upgrades, room additions, structural repairs, energy efficiency improvements, and accessibility modifications. HomeStyle also allows luxury improvements like pools, landscaping, and outdoor kitchens that FHA does not.
FHA 203(k) does not allow luxury items such as swimming pools, hot tubs, outdoor kitchens, or barbecue pits. Neither program covers commercial-use additions or improvements that do not become a permanent part of the property. The home must remain residential, and all work must meet local building codes.
After closing, renovation funds are held in an escrow account. As the contractor completes work at each stage, an inspection is performed to verify completion. Once the inspection passes, funds are released (drawn) to pay the contractor. This draw process continues through each phase until the renovation is complete.
A HUD consultant is a qualified professional who oversees the renovation process on FHA 203(k) Standard loans. They review contractor bids, create the work write-up, monitor construction progress, and approve draw requests. A HUD consultant is required for 203(k) Standard (renovations over $35,000) but NOT required for 203(k) Limited or HomeStyle loans.
FHA 203(k) typically requires renovations to be completed within 6 months of closing. HomeStyle loans generally allow up to 12 months. Extensions may be available in some cases. The timeline is established before closing based on the contractor's scope of work and project schedule.
It depends on the scope of work. For minor cosmetic renovations (203(k) Limited), you can often live in the home. For major structural renovations (203(k) Standard), you may need to live elsewhere during construction. Both FHA 203(k) programs allow up to 6 months of mortgage payments to be financed into the loan if the home is uninhabitable during renovation.
The contingency reserve is a required buffer built into the renovation budget to cover unexpected cost overruns. FHA 203(k) Standard requires a 10–20% contingency reserve depending on the scope of work. HomeStyle typically requires 10–15%. If the contingency is not used, it is applied to reduce your loan balance after the project is complete.
FHA 203(k) is limited to owner-occupied primary residences only (1–4 units). However, Fannie Mae HomeStyle allows renovation loans for primary residences, second homes, and investment properties (1–4 units). HomeStyle is the go-to option if you want to purchase and renovate a rental or investment property.
FHA 203(k) requires a minimum 3.5% down payment with a 580+ credit score (10% with 500–579). Fannie Mae HomeStyle requires 3–5% down for primary residences, 10% for second homes, and 15–25% for investment properties. Down payment is calculated on the total loan amount (purchase price plus renovation costs).
Yes. Both FHA 203(k) and HomeStyle offer refinance options. If you already own a home and want to finance renovations, you can refinance into a renovation loan based on the after-improved value. This is a great option for homeowners who want to renovate but do not have the cash or existing equity to fund improvements.
A renovation loan finances the purchase AND renovation in one mortgage at purchase, based on the after-improved value. A home equity loan or HELOC is a second lien taken after you already own the home, based on your current equity. Renovation loans offer lower down payments and a single closing, while home equity products require existing equity in the property.
Renovation loans typically take 45–60 days to close — longer than a standard purchase mortgage (30–45 days). The additional time is needed for the as-improved appraisal, contractor bid review, HUD consultant involvement (for 203(k) Standard), and renovation plan approval. Starting the process early and having contractor bids ready helps speed things up.
Reviews
What Homebuyers Say About Texana Bank
Real reviews from real borrowers. See why homebuyers trust Texana Bank Mortgage for renovation financing.
I had an excellent experience working with my texana bank mortgage from start to finish. They were extremely professional, knowledgeable, responsive, and made the entire mortgage process feel much easier than I expected.
They took the time to explain everything clearly, answered all of my questions, and kept me informed throughout the entire process. I always felt like I had someone in my corner who genuinely cared about helping me reach my goals.
If you’re looking for a mortgage broker who is trustworthy, dependable, and willing to go the extra mile for their clients, I highly recommend them. I truly appreciate all of their hard work and would definitely work with them again!
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Kent Sisco
★★★★★
Adam McCormick is fantastic! Easy to work with and keep me informed every step of the way! Looking forward to working with him again in the future
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Andrea Ferrell
★★★★★
Adam was phenomenal from start to finish! He was friendly and professional. He assisted me every step of the way, walking me through the process with ease. He was always there for whatever questions I had. He was very, very patient and always reached out to me in a timely manner if I contacted him and he was unavailable at the time. Moreover, he made me feel as if he cared for more than just my loan, but me as a person!!! Texana is blessed to have him as an associate!!
Andrea
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Clay Ragsdale
★★★★★
Where to really start. Adam walked me through everything and put me at ease. I have had some bad experiences with other companies so I was digging and looking for any red flag. There was none with him and his direct talk is what did it for me. Someone that is real and just says what it is. No false hope or misdirection at anytime.
I would recommend him to anyone and definitely Someone looking for honesty and caring. The communication is top notch and a true professional.
Respectfully,
Clay
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Belvia Lynn
★★★★★
My overall experience while working with Adam McCormick was excellent. He was very pleasant and professional.
J
Joseph Hardman
★★★★★
Adam McCormick is an absolute professional in every sense of the word. I will NEVER use any other loan officer for my financials other than Adam as long as he is in the business. His work as my loan officer was exceptional. Throughout the process, he always responded to an e-mail, responded to a text, called right back if not answering immediately. He always made you feel as though you were his only client. There was never the impression he had more important things to do other than speak with you. He worked with us through a death in the family, personal issues, and numerous other challenges. It's possible other loan officers would have given up on us during this process, but Adam stuck with us through it all. His work ethic is amazing. He is an expert in his craft. I could not possibly give a higher recommendation, he has redefined what right looks like in this business.
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Marsha Kessler-Bradshaw
★★★★★
I was about to go with another company for this refinance no cash out until I received a call from this Adam McCormick. He was so knowledgeable and made me feel very comfortable with this process. Adam is knowledgeable ,courteous, understanding and has a real passion and patience for people. 👍We are at the closing. Thank you Adam McCormick!!
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Peter Jenkins
★★★★★
My situation had its difficulties. Justin was confident and persistent through the process and we the got the result
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Dale Samuel
★★★★★
Mark has been very professional and has been very respectful to my wife and myself.
Mark has shown that genuine human qualities and really worked with us and for us.
This actually been a pleasure to get to know Mark.
J
James Fields
★★★★★
Outstanding Service and support from a truly Customer Oriented Agent! My pleasure to have worked with Mr. MCcormick.! Would follow him to next source if necessary. He is concerned in an outstanding balanced way. My pleasure to?know and do Business with him and The Bank!
JFields
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Rose Stone-Stewart
★★★★★
Texana Bank was there for us throughout the entire process. Their personableness, as well, their professionalism. As a financial institution it was nice to know that while obtaining a loan, we had a safe place to relay. They are absolutely “by the book” and at the same time makes the process easier to participate. The hospitality and genuine concern as clients was overwhelming of which we will always consider Texana Bank first, before mostly any other financial institution.
M
Mitchell Morris
★★★★★
Greg was awesome and the process was simple. I have nothing but the highest praise for the process and for Greg himself. Thank you.
R
Ronald Bylsma
★★★★★
Best refi experience of our lives, Andre was very knowledgeable and always kept us calm when things got stressful. Would recommend Mr. Andre Floyd to anyone looking for a great lending officer!
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Dejan Jajcevic
★★★★★
I’ve worked with mini bankers before and I used to do them over a decade ago myself and my experience that I had with Chad was nothing short of phenomenal. He is a wonderful Banker does a very diligent job and did not miss any moments of reassuring me where my loan was and closing I couldn’t say enough good things about him and I hope if I ever need to go through this stressful process again he is still in business to take care of me
J
James Reaves
★★★★★
Adam is awesome super friendly easy to work with always aware of what’s going on and keeps you informed which is great.
L
Lesli Hopkins
★★★★★
Lynette is absolutely awesome to work with! She takes the time to make you comfortable with the process and answers any questions completely and accurately
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Bobby Strickland
★★★★★
Andre Floyd was ABSOLUTELY AMAZING. I just love working with him.
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Abraham Sanchez
★★★★★
Working with Greg Darlin has been an awesome experience. An honest and sincere individual. He is to the point and very very knowledgeable. I appreciate the fact that he didn’t try to give me the run around and through the entire process I learned a few things. Thank you.
Ready to Buy and Renovate?
From finding the right fixer-upper to moving into your dream home, our renovation loan specialists guide you through every step.
