Renovation Purchase Loansin Utah — FHA 203(k) & HomeStyle
Buy the home you can afford and finance the renovation into the same loan. One closing, one monthly payment — no separate personal loan or credit cards required.
What is a renovation loan?
A renovation loan lets you finance a home's purchase price and the cost of repairs or upgrades in one mortgage. The main options are the FHA 203(k), which allows as little as 3.5% down, and Fannie Mae's HomeStyle Renovation conventional loan. Money for the work is paid out as it's completed.
Reviewed by Kenny Farshchian, NMLS #1639863Updated
What Is a Renovation Purchase Loan?
A renovation purchase loan lets you buy a home and finance the cost of repairs or upgrades in one mortgage. Instead of paying cash or taking out a separate loan for renovations, your total loan amount is based on the home's value after the work is completed.
Two main programs make this possible: the government-backed FHA 203(k) and the Conventional HomeStyle Renovation loan. Both let you close on the home first, then complete approved renovations using funds held in escrow.
Translation: You get one loan, one monthly payment, and a home that's exactly how you want it — instead of juggling a mortgage plus a personal loan or credit card debt for repairs.
Renovation Loan Programs
We'll help you choose the program that fits your project, property type, and financial goals.
FHA 203(k) Limited
For smaller, non-structural projects — cosmetic updates, new flooring, appliances, minor repairs.
- Down payment as low as 3.5%
- Repair costs typically up to $35,000
- No structural or major remodeling work
- No 203(k) consultant required
FHA 203(k) Standard
For larger projects — structural repairs, room additions, major remodels, or homes needing significant work.
- Down payment as low as 3.5%
- No fixed repair cost ceiling (subject to FHA loan limits)
- Structural repairs and additions allowed
- HUD consultant required to oversee the project
Conventional HomeStyle Renovation
Fannie Mae's renovation loan — more flexible property types, including second homes and investment properties.
- Down payment as low as 5% (primary residence)
- Eligible for primary, second homes, and investment properties
- Luxury upgrades and larger renovations allowed
- Licensed contractor required to complete the work
What's Covered
Typically Eligible
- Kitchen and bathroom remodels
- Roof, gutter, and downspout replacement
- HVAC, plumbing, and electrical upgrades
- Flooring, painting, and cosmetic updates
- Room additions and structural repairs (Standard 203(k) / HomeStyle)
- Energy efficiency improvements
- Accessibility upgrades (ramps, widened doorways)
- Repairing foundation, structural, or safety issues
Generally Not Eligible
- Luxury items like pools or outdoor kitchens (FHA 203(k) — allowed under HomeStyle in some cases)
- Do-it-yourself labor in most cases — licensed contractors are required
- Tearing down and fully rebuilding the home from the foundation
- Work that isn't completed within the program's required timeline
Every project is unique. What's eligible depends on which program you choose and your property type. We'll review your specific renovation plans before you make an offer.
How a Renovation Purchase Works
Get Pre-Approved
We review your credit, income, and goals to determine which renovation program — FHA 203(k) or Conventional HomeStyle — fits your situation best.
Find Your Fixer-Upper
Shop for a home knowing you can finance both the purchase price and the renovation costs into a single loan. Your offer can include your planned repairs.
Get Contractor Bids
Licensed, insured contractors submit detailed bids for the work. For larger projects, a HUD consultant helps document the scope and cost.
Appraisal 'Subject to Completion'
The appraiser values the home based on its completed, renovated condition — which determines your total loan amount, including repair costs.
Close & Renovation Begins
You close on the home and the loan. Renovation funds are held in an escrow account and released to your contractor in draws as work is completed.
Move In & Enjoy
Once renovations are complete and verified, you move into a home that's exactly how you want it — without a separate personal loan or credit card debt.
Renovation Loan Pros & Cons
- Finance the purchase and renovation in a single loan and closing
- One monthly payment instead of a mortgage plus a separate loan
- Buy homes other buyers pass on due to needed repairs
- Loan amount based on the home's after-renovation value
- Low down payment options available through FHA 203(k)
- More paperwork and a longer process than a standard purchase loan
- Contractor bids and, for larger projects, a HUD consultant are required
- Funds are released in draws tied to completed work, not upfront
- Renovations must be completed within the program's timeline
- Fewer lenders offer these programs compared to standard loans
Frequently Asked Questions
A renovation purchase loan lets you buy a home and finance the cost of repairs or upgrades in a single mortgage. Rather than taking out a separate personal loan or paying cash for renovations, the repair costs are rolled into your mortgage, based on the home's value after the work is completed.
FHA 203(k) loans are government-backed with a lower minimum down payment (3.5%) but are limited to owner-occupied primary residences. Conventional HomeStyle Renovation loans require a slightly higher down payment (around 5%) but can be used for primary residences, second homes, and even investment properties, with fewer restrictions on the type of work allowed.
In most cases, no. Both FHA 203(k) and HomeStyle Renovation loans generally require the work to be completed by a licensed, insured contractor. This protects the quality of the work and the lender's collateral. There are limited exceptions for the FHA 203(k) Limited program in specific circumstances — ask your loan officer about your situation.
The loan amount is based on the lesser of the purchase price plus renovation costs, or the home's appraised value after the renovations are completed — known as the 'subject to completion' or 'after-improved' value. This is different from a standard purchase loan, which is based only on the home's current condition.
FHA 203(k) loans typically require renovations to be completed within 6 months of closing. Conventional HomeStyle Renovation loans generally allow up to 12 months, depending on the scope of work. Your loan officer and contractor will help you build a realistic timeline before you close.
Requirements vary by program. FHA 203(k) loans generally follow standard FHA credit guidelines (often 580+ for the lowest down payment), while Conventional HomeStyle Renovation loans typically require credit in the high-500s to 620+ range, similar to other conventional financing. We'll confirm your exact eligibility during pre-approval.
Yes — the FHA 203(k) Standard and Conventional HomeStyle Renovation programs are specifically designed for homes needing significant work, including structural repairs, additions, and full remodels. Utah's older housing stock in areas like Ogden and Salt Lake City makes these programs especially useful for buyers willing to take on a project.
Renovation Loans in Utah's Older Neighborhoods
Established neighborhoods in Ogden, Salt Lake City, and parts of Davis County have some of Utah's best-priced homes — many of them older properties that need some work. A renovation purchase loan can turn a passed-over fixer-upper into your ideal home, often for less than buying a fully updated house.
Fewer buyers know these programs exist. That means less competition for well-priced fixer-uppers — and more negotiating room when your offer is backed by a strong, fully-underwritten renovation pre-approval.
Alternatives to Consider
Depending on your situation, you may also want to consider:
Found a Fixer-Upper You Love?
Let's see if a renovation purchase loan can make it work — one loan, one payment, and a home built exactly how you want it.