Can You Use a Renovation Loan on Any House?

Can you use a renovation loan on any house?

Not every property qualifies for a 203k renovation loan. There are clear rules about what works and what does not.

Most single family homes qualify as long as you plan to live in the house as your primary residence. Townhomes and row houses also work in most cases.

Two unit, three unit, and four unit properties can qualify too. You must live in one of the units as your main home. The other units can be rented out.

FHA approved condominiums are allowed. The condo project must be on the official FHA approved list.

Some manufactured homes can work if they meet specific requirements. They usually need to be permanently attached to a foundation and built after certain dates.

Mixed use properties can also qualify in some cases. The key rule is that the renovation money can only be spent on the residential portion of the property. Commercial areas cannot be financed with the 203k funds.

Here is what usually does not qualify.

Investment properties where you will not live in the home. Pure rental homes are not allowed.

Vacation homes or second homes that you will not occupy as your primary residence.

Commercial buildings with more than four units.

Mobile homes that are not permanently affixed to a foundation.

The biggest rule to remember is that the 203k is designed for primary residences. You need to live in the property as your main home for at least one year after closing.

If you are looking at a single family home, a small multi unit property, or a mixed use property where the work is focused on the residential side, you are in a strong position. Always check with an experienced 203k lender early so they can confirm the property will qualify before you get too far into the process.