Renovating Your Home? Explore Financing Options That Fit Your Goals
Whether you’re buying a fixer-upper or updating the home you already own, financing your renovation could open up more possibilities. The right solution depends on whether you’re purchasing, refinancing or tapping into existing home equity.
Here’s how your renovation funding options compare.
Include Renovation Costs in Your Mortgage
If you're purchasing a home that needs repairs — or refinancing and planning improvements — renovation loan programs allow you to finance both the home and the updates together.
Guaranteed Rate Affinity’s dedicated Renovation Specialists provide:
- Focused expertise in renovation loan requirements
- Clear communication throughout the process
- Experience supporting accurate property appraisals
FHA 203k Loan1
The FHA 203k loan is designed for primary residences and may be used for:
- Single-family homes
- 2–4 unit properties
- Required repairs and optional improvements
- Down payment options as low as 3.5%
This program can help buyers finance both the purchase and renovation costs with one loan.
HomeStyle® Renovation Mortgage
The HomeStyle® Renovation Mortgage offers additional flexibility and may allow:
• Down payment options as low as 3%
• All permanently affixed improvements, including luxury upgrades
• Financing for primary residences, second homes or investment properties
• Single-family homes, townhomes and 1–4 unit properties
This option may appeal to buyers or homeowners seeking broader renovation flexibility.
How Renovation Loans Work
- Qualification based on income and credit
- If purchasing, shop for property
- Contractor bid or work write-up
- Initial underwriting and inspections
- Appraisal
- Final underwriting
- Closing
- Rehab funds held in escrow and disbursed as work is completed
Renovation loans can be a strong fit when you want to finance improvements upfront as part of your mortgage.
Use Your Home’s Equity for Renovations
If you already own your home and have built equity, you may be able to access funds without changing your current mortgage.
Home Equity Line of Credit (HELOC)2
A HELOC is a revolving line of credit secured by your home. During the draw period — typically up to five years — you could borrow as needed and repay repeatedly. After the draw period, you enter repayment.
Home Equity Loan3
A home equity loan provides a lump sum based on available equity and is repaid as a second mortgage, typically with fixed payments over time.
Homeowners commonly use equity funds for:
- Kitchen or bathroom renovations
- Roof replacement or structural repairs
- Accessibility upgrades
- Other home improvement projects
HELOC vs. Cash-Out Refinance4
A cash-out refinance replaces your existing mortgage with a larger one and provides the difference in cash.
Key differences:
- Cash-out refinance replaces your current mortgage
- HELOC or home equity loan keeps your existing mortgage in place
- HELOC offers ongoing access to funds during the draw period
Each option has different financial implications depending on your current interest rate and long-term goals.
Choosing the Right Renovation Financing Option
- Buying a home that needs work? A renovation loan like FHA 203k or HomeStyle® may allow you to finance improvements from day one.
- Staying in your home and building equity? A HELOC or home equity loan could provide access to funds for updates.
The right solution depends on your financial profile, property type and renovation scope.
Reach out to explore which option may align with your goals.
1 - Credit score and down payment requirements higher for 2-4 unit, investment properties and renovation products.
2 - Guaranteed Rate Affinity's home equity line of credit (HELOC) is an open-end product where the full loan amount (minus the origination fee) will be 100% drawn at the time of origination. The initial amount funded at origination will be based on a fixed rate; however, this product contains an additional draw feature. As the borrower repays the balance on the line, the borrower may make additional draws during the draw period. If the borrower elects to make an additional draw, the interest rate for that draw will be set as of the date of the draw and will be based on an Index, which is the Prime Rate published in the Wall Street Journal for the calendar month preceding the date of the additional draw, plus a fixed margin. Accordingly, the fixed rate for any additional draw may be higher than the fixed rate for the initial draw. This product is currently only offered in the states of Arizona, California, Colorado, Connecticut, Florida, Georgia, Illinois, Massachusetts, Missouri, North Carolina, New Jersey, Ohio, Pennsylvania, Rhode Island, and Virginia. The HELOC requires you to pledge your home as collateral, and you could lose your home if you fail to repay. Property insurance is required as a condition of the loan and flood insurance may be required if your property is located in a flood zone. Borrowers must meet minimum lender requirements in order to be eligible for financing. Available for primary, second homes and investment properties only. Dependent on minimum credit score and debt-to-income requirements. Occupancy status, lien position and credit score are all factors to determine your rate and max available loan amount. Not all applicants will be approved. Applicants subject to credit and underwriting approval. Contact Guaranteed Rate Affinity for more information and to discuss your individual circumstances. Restrictions Apply.
3 - Available as closed end, fixed rate, second lien. Eligibility for second home and investment properties allows for only 10 total financed properties. The total of first and second liens cannot exceed $3M. No more than two mortgage liens are permitted on a single property. Financing subordinate to the new second lien is not permitted. First lien mortgages must be fully amortizing, fixed rate or adjustable rate mortgage loans only. Minimum down payment and FICO score requirements apply and impact total loan amount available from $50,000 to $500,000. Maximum debt to income cannot exceed 50%. State and product restrictions vary so talk to your loan officer about what options may be available to you. Not available in all states. Additional restrictions apply. Not all applicants will be approved. Applicant subject to credit and underwriting approval. Not a commitment to lend. Contact Guaranteed Rate Affinity for more information.
4 - Refinancing your mortgage may increase costs over the term of your loan.
All information provided is for informational and educational purposes only and should not be construed as financial, investment or legal advice. Guaranteed Rate Affinity does not guarantee the accuracy or completeness of the information provided and assumes no liability for reliance on such information.
Guaranteed Rate Affinity, LLC is a private corporation organized under the laws of the State of Delaware and has no affiliation with the U.S. Department of Housing and Urban Development, the U.S. Department of Veterans Affairs, the U.S. Department of Agriculture or any other government agency.