What is a Rehab Loan?

A Rehab Mortgage Loan, also known as a Renovation Loan, is a financing option designed for homebuyers or homeowners looking to purchase or refinance a property and fund its renovations or repairs all in one loan. These loans are ideal for properties that need upgrades, structural repairs, or cosmetic improvements, making them particularly useful for fixer-upper homes or distressed properties.

Key Features of a Rehab Mortgage Loan:

Combination Loan: Funds both the purchase/refinance of the property and the cost of renovations or repairs.
Single Closing: The loan is structured as one mortgage, simplifying the process and saving on additional fees.
Flexible Use: Covers a wide range of repairs, including:
- Structural repairs
- Updating kitchens and bathrooms
- Roof replacements Energy efficiency improvements
- Cosmetic upgrades like flooring or painting
Appraisal Based on Future Value: The loan amount is determined based on the property's estimated value after renovations are completed.

Popular Rehab Loan Options:

FHA 203(k) Loan: Backed by the Federal Housing Administration, this loan is ideal for buyers with lower credit scores and smaller down payments.
Fannie Mae Homestyle® Loan: A conventional renovation loan that offers more flexibility and fewer restrictions on eligible properties and repairs.
VA Renovation Loan: Available for eligible veterans, active-duty service members, and their families.

Benefits of a Rehab Mortgage Loan:

- Helps you finance and transform a property into your dream home.

- Increases property value by allowing essential and aesthetic improvements.

- Eliminates the need for separate loans or lines of credit for renovations.

Rehab Mortgage Loans provide a flexible solution for those wanting to invest in homes with potential, bridging the gap between purchase and renovation needs.