Rehab loans are an alternative to refinancing your current mortgage to make home improvements on your home. They may also be used in conjunction to a purchase loan agreement to pay for repairs and improvements when you buy your home. The maximum amount available to borrow is not determined from the current value or sale price of the home, but instead, is based upon the final, post-improved value of the residence. This allows the borrower to finance an amount greater than the present value of the home.

Conventional, FHA or VA loans all offer renovation products.

The conventional homestyle renovation loan may be used for single-unit primary residences, second homes and investment properties. First and second homes often require a 20% down payment or 20% current equity in the home for first or second homes and a 25% down payment for investment properties. The maximum loan amount is generally limited to 50% of the post-improved appraised value of the home and may not exceed the conforming loan limit of $417,000.

The FHA 203(K) loans require a minimum down payment of 3.5% of the post-improved value of the home. FHA loans apply only to primary residences of 1-4 units and may not be used for second homes or investment properties. The loan is limited to the current FHA mortgage loan limits for the county where the property is located. For example the loan limits for 2015 are $562,350 in San Diego County and $355,350 in RIverside County for single unit homes.

A VA rehabilitation loan is available to VA eligible borrowers. All repairs and plans must be itemized and estimated and performed by a VA-approved contractor. VA approved home improvements include roof repairs, flooring repair, HVAC systems, bath and kitchen remodels. The VA also offers an Energy Efficiency Improvement loan which increases the VA loan amount up to $6,000 for energy efficient upgrades such as new windows, solar energy, HVAC and other cost-saving energy upgrades.

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