Rehab Loan (FHA 203k & Conventional)
Buy the house. Fund the transformation.
A rehab loan rolls the purchase price and renovation costs into a single mortgage — so you only need one loan, one closing, and one monthly payment. Whether you're restoring a fixer-upper through the FHA 203k program or using a conventional renovation loan, Summit Crest Mortgage helps you turn a diamond-in-the-rough into your dream home without the complexity of separate construction financing.
- One loan covers purchase + renovation costs
- FHA 203k (limited and standard) options
- Conventional HomeStyle renovation option
- Funds held in escrow, released as work completes
Why choose this loan
Benefits of a Rehab Loan (FHA 203k & Conventional)
One closing, one payment
Without a rehab loan you'd need a purchase mortgage and a separate construction or personal loan — two closings, two sets of fees, and two monthly obligations. A rehab loan streamlines everything into one transaction.
Based on after-renovation value
The loan amount is determined by the property's expected value after renovations are complete — not its current as-is price. This means you can borrow enough to actually complete the work.
Access distressed inventory
Many competitively priced homes are passed over by conventional buyers because they won't qualify for standard financing. A rehab loan lets you bid on properties others can't touch, often at a discount.
FHA 203k offers a low entry point
The FHA 203k Limited program allows up to $75,000 in renovation costs with a down payment as low as 3.5% — making gut-and-update projects accessible for buyers without large reserves.
Eligibility
Do you qualify?
Typical guidelines for a Rehab Loan (FHA 203k & Conventional). Final eligibility is determined during underwriting.
- FHA 203k: minimum 580 credit score, 3.5% down, primary residence only
- FHA 203k Limited: renovation costs capped at $75,000; structural repairs require Standard 203k
- Conventional HomeStyle: minimum 620 credit score; available for primary, second home, and investment properties
- Licensed, HUD-approved or lender-approved contractor required for Standard/HomeStyle projects
- Property must be at least one year old (new construction rehab generally not eligible)
- Renovations must be permanently attached to the property; luxury additions have restrictions under 203k
Sample scenarios
Illustrative Rehab Loan (FHA 203k & Conventional) rates
FHA 203k 30-Year Fixed
6.625%
Illustrative; APR includes MIP
Conventional HomeStyle 30-Year Fixed
6.875%
Illustrative; no upfront MIP
FHA 203k min. down
3.5%
With 580+ credit score
Rates shown are for illustrative purposes only, are not a quote or guarantee, and do not reflect a specific offer. Actual rates depend on credit score, loan amount, loan-to-value, occupancy, and other factors, and change daily. Contact us for a personalized rate quote.
How it works
Your path to approval
- 1
Identify the property and scope of work
Work with a contractor to develop a detailed scope of work and cost estimate before applying. The lender will need this to establish the renovation budget and after-improved-value appraisal.
- 2
Rehab loan pre-approval
We assess both your financials and the project feasibility, then issue a pre-approval based on the projected after-renovation value of the property.
- 3
Appraisal, underwriting, and closing
An appraiser evaluates the home 'as-improved' using your scope of work. Once underwriting clears, you close and renovation funds go into an escrow account.
- 4
Renovations and draw releases
Your contractor begins work and submits draw requests as milestones are reached. Funds are released from escrow after inspections confirm completed work, keeping the project on track.
FHA 203k Limited vs. FHA 203k Standard vs. Conventional HomeStyle
| 203k Limited | 203k Standard | HomeStyle | |
|---|---|---|---|
| Max renovation cost | $75,000 | Unlimited | 75% of as-improved value |
| Structural repairs | No | Yes | Yes |
| Investment property | No (primary only) | No (primary only) | Yes |
| Min. credit score | 580 | 580 | 620 |
| Complexity | Lower | Higher (HUD consultant req'd) | Moderate |
Frequently asked questions
What's the difference between FHA 203k Limited and Standard?
The Limited 203k (formerly 'Streamline') caps renovation costs at $75,000 and doesn't allow structural repairs. The Standard 203k handles larger projects, structural work, and major rehabs but requires a HUD-approved 203k consultant to manage the draw process.
Can I do the renovation work myself with a 203k loan?
Generally, no. The FHA 203k program requires a licensed contractor. You may be able to act as your own general contractor on a Conventional HomeStyle loan under certain conditions, but lenders typically require documentation of your construction experience.
How are renovation funds disbursed?
Renovation funds are held in an escrow account at closing. As the contractor completes defined milestones, you submit draw requests. The lender (or 203k consultant for Standard) inspects the work and releases funds from escrow — protecting both you and the contractor.
Can I use a rehab loan to flip a house?
FHA 203k loans require owner-occupancy — they're for homes you'll live in. Conventional HomeStyle loans can be used for investment properties, making them a viable option for investors who want construction-to-rental financing in a single loan.
Ready to explore a Rehab Loan (FHA 203k & Conventional)?
Talk to a loan officer today — friendly, no-pressure guidance from real humans.