What is a Renovation Mortgage?
A renovation mortgage allows you to finance both the purchase price of a home and the cost of renovations in a single loan. Instead of taking out a mortgage for the purchase and then scrambling to find financing for improvements, everything is bundled together with one monthly payment.
The mortgage is based on the after-renovation value (ARV) of the property, not just the current purchase price. This means you can finance up to 80% of what the home will be worth after improvements are complete, giving you access to more funds than a traditional mortgage would allow.
Renovation mortgages work for both purchasing fixer-uppers and refinancing your existing home to fund major improvements. They offer lower interest rates than personal loans or credit cards, making them an affordable way to create your ideal living space.
Types of Renovation Financing
Buy a fixer-upper and finance renovations in one mortgage. Perfect for turning a dated property into your dream home.
Tap into your home equity to finance major renovations. Lower rates than personal loans or credit cards.
Flexible credit line for ongoing projects. Only pay interest on what you use, when you use it.
Alternative financing for major renovations. Keep your existing first mortgage rate while accessing equity.
Eligible Renovation Projects
Kitchen Renovations
Cabinets, countertops, appliances
Bathroom Upgrades
Modern fixtures and finishes
Basement Finishing
Add living space and value
Adding Bedrooms
Increase functionality
Roof Replacement
Protect your investment
HVAC Upgrades
Modern heating and cooling
Energy Efficiency
Solar, insulation, windows
Accessibility Mods
Aging in place features
Structural Repairs
Foundation, framing work
Outdoor Spaces
Decks, patios, landscaping
How It Works - 5 Step Process
Get Pre-Approved
Determine your budget including renovations. We'll assess your financial situation and qualification.
Find Property & Plan
Identify the home and scope out renovation plans. Work with contractors to understand costs.
Get Quotes
Obtain contractor estimates and detailed renovation plans. Secure necessary permits.
Appraisal
Property appraised at after-renovation value. This determines your maximum loan amount.
Close & Renovate
Funds held in trust, released as work completes. Your lender inspects progress at key milestones.
Benefits of Renovation Mortgages
One payment for everything - simpler budgeting and lower overall interest costs.
Much lower rates than personal loans, credit cards, or unsecured financing options.
Strategic renovations can significantly boost your property value and equity position.
Transform a fixer-upper into your dream home without draining your savings.
What You'll Need
- Contractor quotes and estimates
- Detailed renovation plans and scope
- Building permits where required
- Before and after floor plans
- Material specifications
- Typically 5-20% of total project cost
- Based on after-renovation value
- First-time buyers may qualify for 5%
- Investment properties require 20%
- Higher down payment = better rates
- Licensed and insured contractor
- Detailed scope of work document
- Fixed price contract preferred
- Timeline for completion
- Warranty information
Renovation Budget Calculator
This is an estimate based on a 5% interest rate. Actual rates and payments may vary based on credit, property type, and market conditions. Contact us for a personalized quote.
Tips for Success
Experienced Contractors
Work with licensed, insured professionals who have renovation mortgage experience.
Detailed Quotes
Get comprehensive written estimates that break down materials and labor costs.
Plan Contingencies
Budget an extra 10-15% for unexpected issues - older homes often have surprises.
Draw Schedules
Understand how and when funds will be released throughout the renovation process.
Keep Records
Document everything - receipts, photos, permits, and communications with contractors.
Stay Connected
Maintain regular communication with your lender, especially if plans or costs change.
Before & After Examples
Full kitchen and bathroom renovation, new flooring throughout, updated electrical and plumbing.
Basement finishing with bedroom and bathroom, new roof, HVAC system upgrade, exterior paint.
Kitchen modernization, bathroom refresh, new windows, landscaping and curb appeal improvements.
Frequently Asked Questions
Ready to Transform Your Home?
Let's discuss your renovation project and explore financing options. Our mortgage experts will help you navigate the process from start to finish.