Much like a construction loan, when a home requires repairs or renovations, the lender evaluates the property in its current “as-is” condition, while also reviewing the contractor’s plans, specifications, and blueprints for the rehab work.
As the renovations progress, the lender releases funds in stages, based on the contract and after successful inspections confirm the work has been properly completed. Once the renovation is finished, the loan transitions into a permanent “end loan,” just like in construction-to-permanent financing.
Types of Rehabilitation Loans
Rehabilitation loans come in two main categories: government-backed and conventional.
🔷 Government-Backed Rehab Loans
- FHA 203(k) Standard
- Designed for the renovation of one- to four-family primary residences
- Can also be used for mixed-use properties, provided the commercial portion does not exceed 49% of the total square footage and the borrower lives (or will live) on-site
- FHA 203(k) Streamline
- A simplified version for less extensive repairs (no structural work) with a lower cost and fewer documentation requirements
- VA Renovation Loan
- Allows eligible veterans to finance both the purchase and renovation of a home under the VA loan program
🔷 Conventional Rehab Loans
- Fannie Mae HomeStyle®
- Freddie Mac Renovation Mortgage
These conventional options offer greater flexibility than government rehab loans, allowing financing for:
- Primary residences
- Second homes
- Investment properties
Contact Miami Mortgages for a Rehabilitation Loan! Contact Us.