Renovation Construction Loans

Renovation vs Construction Loans

When looking for a property, it is extremely difficult, and sometimes near impossible, to find the exact idea that you have in your head. And if you find something you love that checks off most of the boxes, there will always be a few things that need to be done. In these cases, a construction or renovation loan fits your needs. Having the ability to fully customize and render the property to your standards is an unmatched attribute. Let’s take a deeper look into Renovation vs Construction Loans. 

Renovation Loans and Financing 

Renovation Loans, often referred to as Rehab Loans, are loans specific to the renovation, remodeling, addition, or improvement of an already built and standing structure. It is often suggested to only go into a Rehab Loan if there is a vulnerability in the integrity and safety of certain aspects of your property or if it will decrease costs in the future and increase the value of the property. 

There are many programs when it comes to Renovation Loans. These include Fannie Mae, FHA, USDA and a few other non-mainstream programs. All programs have different restrictions and requirements – make sure to discuss these with a Mortgage Loan Officer before moving forward. 

Construction Loans and Financing 

In contrast to Renovation Loans, Construction Loans are specific to the building of a property or structure on a plot of land. This loan is utilized to cover the materials, labor, and permits that are required. Although not covered every time, many Construction Loans include furnishings such as landscaping and home appliances. Construction Loans are often short-term and only cover the Construction aspect. Therefore, the borrower must then refinance, upon completion, to a permanent financing program. 

Like Renovation Loans, Construction Loan programs are also found with big-name providers like FHA, USDA, and Fannie Mae. A Mortgage Loan Officer will guide you to the best fitting financing program to your unique scenario. 

More to Know about Renovation vs Construction Loans

If you have an outstanding credit score with the ability to put the costs, mostly referring to renovations, then it may be in your best interest to charge it to your credit and save yourself time, energy, and even some money.

Things to consider when taking out either loan are:

  • Credit Score
  • Debt-to-Income Ratio
  • Down-Payment Amount
  • Experience of Builder or Contractor you are working with

These loans, like any big financial decision, are not something to rush – taking your time, doing your research, and working with a knowledgeable Loan Officer ensures the best outcome for yourself! offers terms up to 24 months, 90% LTC, and 75% LTARV, nationwide!

Click or call today to begin your qualification and application process!

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Ryan Thaler

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