If you’re thinking about renovating your home, you might be considering borrowing money as this would be quite costly. You have to bear in mind that the total cost would most likely involve more than just labor and the materials needed. Everything from architectural and engineering services, inspections, and permits would require you to pay up to a certain amount. 

There are various home renovation loans that you can tap into. Most of them are contingent to how much equity you’ve actually built all throughout. Whatever the project may be, there’s definitely a personal loan out there available for you. Here are the different loans you can use for your home renovation project.


This is one of the common loans used when it comes to home renovations or improvements. This can be used for any type of project and can cover up to 75% of the home price together with renovation costs or as the completed appraised value. This is a type of single-closed loan, meaning that it’s just one loan where you wouldn’t have to take out another mortgage for repairs. Getting just one loan reduces a ton of paperwork and closing costs. The funds go directly into an escrow account, not to the borrower themselves. This makes it a bit harder for some since it gives less freedom for the borrower. 


Assuming that the project involves your primary residence, your credit score should at least be 620. A down payment of 5% of the sales price of the home is required as well. Also, the project should always involve enlisting a certified contractor wherein they would submit a cost estimate together with details of the work to be done on the home. 

FHA 203(k)

This is a government-backed loan that’s similar to Fannie Mae. However, this is open to borrowers with much lower credit scores. The funds can be used for a wide range of projects, from minor renovations (at least $5,000) to total reconstruction of the living space as long as the original structure remains untouched. Just like the previous loan, the funds go directly into an escrow account. This can’t be used when you intend to flip your property within 90 days. There are several rules on how soon you can resell the property.


The minimum down payment for this type of loan would only be 3.5% of the property’s sales price. When a borrower avails of this loan, they are required to work with a 203(k) consultant which serves as the project manager who assesses the costs, plans, and oversees the project overall. There are two types of FHA 203(k) loans, namely:

  • Limited (formerly called Streamline) – aimed for cosmetic renovations or minor improvements. The loan is capped at $35,000.
  • Standard – this is used for more extensive projects. This is available for homes that are at least a year old. The minimum cost of the project should be $5,000 and requires a 203(k) consultant to work with the borrower.


While the previous two were mostly government-backed loans, a HELOC is a type of private loan. With this loan, you pay interest only on the amount that you borrow. You also have a predictable payment schedule with equally divided monthly payments. The caveat here is that there may be upfront fees such as application and loan processing fees, appraisal fees, as well as document and broker fees.

To understand this fully, a home equity loan (second mortgage) is a one-time, lump-sum loan. This means that it’s not subject to fluctuating interest rates and the monthly payments remain constant for the duration of the loan.

A HELOC, on the other hand, has a revolving balance and is suggested by some lenders for those who have several large payments due over time such as a large renovation project. 


This requires you to have a minimum of 20% equity built up on your property. You basically offer your home as a collateral. This means that if you somehow default on your monthly payments, the lender ends up taking the keys to your home. So if you haven’t built up enough equity on your home, you’re better off with a 203(k) or HomeStyle loan. 


As the name implies, this allows the borrower to refinance their mortgage which could be used for a higher amount than the initial one and the borrower gets to have the difference in cash. There are generally no restrictions on how the borrower utilizes the funds. 


Similar to HELOCs, this requires the borrower to present their home as a collateral. A 20% home equity is needed in order to qualify for this loan. The amount given to the borrower is limited to the available equity built on the property. Also, unlike the previous lona types where the minimum credit score would be 620, this loan generally starts at 640.

Nowadays, it seems to be a generally good time to seek a loan since interest rates are dropping down and lenders give borrowers more freedom for applications. Remember, having a realistic outlook towards your renovation project helps you secure the right type of loan for you. No matter how big or small your renovation project may be, our team at GetPro Construction can definitely help you out in order for it to reach completion. To learn more about our services, contact us at  (734) 822-9595 or you can reach out to us via email at info@getproco.com.