203K Renovation Loans – Advice

How to Buy a Home with Renovation Loans in Chester, Delaware and Montgomery County

Most buyers do not understand the tremendous value of Renovation Loans.  We are Realtors and we are expert at helping buyers in the Philadelphia Suburbs to buy a home and then we help them to turn it into their Dream Home with the use of a Renovation Loan. With the help of conventional Renovation loans … or … FHA 203k Renovation Loans, a buyer with minimum cash can purchase a home that needs improvements  … move into their new home … and then renovate the home in the next 6 months … all with one loan that is obtained when they initially purchase their new home.

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Here are just some examples of the renovations that can be done with a renovation loan …

  • Kitchen upgrades including new custom kitchens
  • Buy all new appliances
  • Bathroom upgrades or additions
  • Replace  flooring with any type
  • Repair or replace roof
  • Repair on install Central Air Conditioning
  • Remove or modify interior walls
  • Upgrade Lighting
  • Much More

Cash Needed

With a Conventional Renovation Loan you need as little as 5% down on the Total amount borrowed for both the initial purchase price and the renovation loan. Note that Conventional Renovation Loans can be used by Investors.

With an FHA 203K Renovation Loan you need as little as 3.5% down on the Total amount borrowed.

With any purchase you also need cash to pay the closing costs but in many cases the Seller can provide an assist and the seller can pay the closing cost. This is really just a way of including the closing cost in your loan but it still has the effect of reducing the amount of cash needed.



A Buyer purchases a home for $250,000 that meets their needs but they want to completely renovate the kitchen and the master bathroom that will cost $30,000.  If they use an FHA 203K loan the Buyer will need $9,800 for the down payment (3.5% of the total) plus about 3% for closing cost which can be rolled into the loan if the seller agrees to provide a seller’s assist.*

At settlement (usually within 6 to 8 weeks) the lender will provide the funds to pay the seller for the purchase of the property and the Buyer moves into the property.  The remaining $30,000 to fund the renovations are put in escrow and provided in stages over the next several months (up to 6 months) as the renovations are completed.  The buyer can select the contractors to do the work and the only requirement is that the contractors must be licensed and insured. It is recommended that the buyer select a contractor that is experienced in completing 203k renovation projects.


Streamline Loans vs Consulting Loans

If the buyer needs less than $35,000 of renovations and the renovations do not involve serious structural changes the buyer can use a Streamline Renovation loan which is relatively easy to administer and does not need the involvement of a special consultant or inspector to oversee the renovations. For this type of loan 50% of the renovation funds are released at the beginning of the renovation project and the remaining funds are released when the renovations are completed.

If the renovations will cost more than $35,000 … OR … if there are structural renovations needed then the renovations must involve the use of an approved Consultant/Inspector who will oversee the project and approve the release of the renovation funds in many stages (or “draws”).  The Consultant should be used when the home is initially inspected and throughout the process.


 What Lenders provide Renovation Loans

Any Lender can provide Renovation Loans … but … we strongly recommend that our buyers work with lenders who specialize in these special loans.  We have been working with lenders who specialize with these loans for many years.  The key to using a renovation loan successfully is to use lenders, real estate agents, 203k consultants and contractors who are experienced with renovation loans. 


 203K Real Estate Agents – Chester, Delaware, Montgomery County

We would welcome the opportunity to help you locate and purchase a home using a renovation loan so you can turn it in to your dream home in the Philadelphia suburbs including Chester, Delaware and Montgomery County.

Click Here to contact us regarding 203k Renovation Loans



*Note:  If the seller agrees to provide a seller assist the purchase price is actually increased by the amount of the closing cost so that the closing cost can be included in the amount borrowed from the lender.