Buy the Fixer. Skip the Second Loan.
Roll the cost of repairs and improvements into your mortgage with one loan, one closing, and one monthly payment — available for purchase and refinance transactions throughout Oregon and California.
3.5–5%
Min. Down Payment
FHA 203(k) & HomeStyle
Loan Type
As-Improved Value
Appraisal Basis
One — Not Two
Closings
Overview
One Loan Covers the Home and the Work
Renovation loans — specifically the FHA 203(k) and Fannie Mae HomeStyle programs — allow you to purchase (or refinance) a home and include the cost of repairs or improvements in a single mortgage. The loan is based on the home's projected value after renovations, not its current as-is value — which often means you can borrow more than the current price tag.
These programs are ideal for buyers who want to purchase a property in need of updates that conventional lenders won't finance, as well as current homeowners who want to remodel without taking out a separate HELOC or personal loan. One loan, one closing, one payment.
In Oregon and California, renovation loans are in especially high demand — and for good reason. In markets like Portland, Bend, Eugene, Sacramento, and the Los Angeles basin, move-in-ready inventory remains historically tight. Buyers willing to purchase a home that needs work often find less competition, lower purchase prices, and the opportunity to build significant equity through improvement. Renovation loans are also the go-to financing structure for ADU additions and conversions — both states now permit accessory dwelling units on nearly every residential lot, and HomeStyle or 203(k) are the cleanest way to finance that work into a purchase or refinance. In California, renovation loans are increasingly used to finance rebuilding after wildfire damage — covering structural repair and code-compliance upgrades that standard mortgages won't touch. Whether you're buying a 1940s craftsman in Portland's Sellwood neighborhood, converting a garage in Bend, or rebuilding after a fire event in Southern California, the right renovation loan structure can make the project possible.
Who This Is For
Tight Inventory. Smart Strategy.
Oregon and California are two of the most supply-constrained housing markets in the country. Buyers willing to look at properties that need work often find less competition, lower prices, and the ability to build equity through improvement. A renovation loan turns a fixer into a finished home — financed from the start, with one payment, one closing, and the home you actually want.
Key Features
What Makes This Program Work
FHA 203(k) — Limited
For non-structural improvements up to $35,000: kitchens, bathrooms, flooring, roofing. Simpler process, faster approval. Ideal for cosmetic updates in Oregon and California fixer-upper markets.
FHA 203(k) — Standard
For major structural renovations: additions, room reconfigurations, foundation work, and fire damage rebuilds. Requires a HUD consultant and handles unlimited renovation scope.
Fannie Mae HomeStyle
Conventional renovation loan with broader property eligibility (primary, second home, and investment). No HUD consultant required, no renovation cost cap, and available up to high-balance limits in high-cost CA/OR counties.
As-Improved Appraisal
The loan is based on the home's projected post-renovation value — giving you borrowing power that reflects the finished product, not the current condition. Especially powerful in appreciating OR/CA markets.
ADU Conversion Financing
Oregon and California are the two most ADU-active states in the country. HomeStyle and 203(k) are among the strongest tools for financing garage conversions, basement suites, and attached ADU additions into your purchase or refinance loan.
Contractor Draw System
Renovation funds are held in escrow and disbursed to your contractor in milestone-based draws as work is completed and inspected — protecting your investment throughout the project.
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Renovation Loans Open Doors — For Everyone at the Table
FHA 203(k) and HomeStyle loans aren't just great for buyers. They solve real problems for listing agents and sellers too — by expanding the buyer pool and getting challenging properties to the closing table.
For Buyer's Agents & Realtors
More listings in play. More offers that close.
Renovation loans let your buyers compete on listings they'd otherwise skip. Instead of walking past a property with dated kitchens, deferred maintenance, or cosmetic issues, your buyer can write an offer that includes the renovation — and close with a single loan and a single monthly payment.
For Sellers & Listing Agents
Sell as-is. No repair credits. Full price.
If your listing has deferred maintenance, dated finishes, or condition issues that are scaring off conventional buyers — renovation financing is your answer. A buyer armed with a 203(k) or HomeStyle pre-approval can purchase the home as-is and fund the improvements themselves. You don't have to discount the price or make repairs before listing.
503-966-9255 · info@lumenmortgage.com · NMLS #1498678
Real-World Scenario
The As-Is Listing That Kept Falling Out of Escrow — Until a 203(k) Buyer Stepped In
How renovation financing saved a listing that had failed conventional appraisal twice
The Situation
A 1962 ranch home in the Portland metro area listed at $415,000 had gone under contract twice. Both times, the conventional appraisal flagged deferred maintenance — a roof with 3–4 years of life remaining, original single-pane windows, and a failing water heater — and both buyers walked rather than renegotiate.
The seller had already reduced the price once. Their listing agent reached out to us after the second failed transaction, asking whether a renovation loan buyer could close this deal without the seller making any repairs.
How It Closed
A buyer pre-approved for FHA 203(k) submitted a full-price offer with a $28,000 renovation budget — covering the roof, windows, and water heater.
The renovation scope was submitted to our in-house 203(k) team within 48 hours. Because the budget was under $35,000, the transaction qualified for 203(k) Limited — no HUD consultant required.
The appraisal was ordered on the as-improved value. The home appraised at $452,000 after improvements — validating both the purchase price and the renovation budget.
The seller made zero repairs, received full asking price, and closed in 31 days. Renovation funds were held in escrow and disbursed to the contractor after closing.
The Takeaway for Listing Agents
If your listing is in a condition that's causing conventional buyers to walk — or if your seller is facing repair credit demands they don't want to meet — a renovation-financed buyer may be the most reliable path to closing. Call us early. We can pre-screen scenarios over the phone without a credit pull and tell you in minutes whether a 203(k) or HomeStyle buyer is a realistic match for your listing.
FHA 203(k) & HomeStyle Renovation Calculator
Model your purchase or refinance with renovation costs built in. Compare FHA 203(k) vs. Fannie Mae HomeStyle side-by-side — including loan limits, MIP/PMI, contingency reserves, and estimated monthly payments.
Jackson County, OR · 2026 HUD/FHFA limits
ADU on property? Still counts as 1 unit — ADUs don't affect loan limits.
> $35,000 — Standard 203(k) applies; a HUD-approved 203(k) Consultant is required
As-Improved Value
Purchase Price + Renovation Budget
Down payment is 3.5% of the as-improved value — not just the purchase price.
FHA 203(k) Key Facts
- Down payment as low as 3.5% of the as-improved value
- 1.75% Upfront MIP financed into the loan
- Monthly MIP for life of loan (at < 10% down)
- Standard 203(k): $5,000+ reno; HUD consultant required if > $35k
- 203(k) Limited: up to $35,000 reno, no HUD consultant needed
- Covers structural, systems, and cosmetic improvements
FHA 203(k) Purchase
Est. monthly payment
$3,187.77
/ month
Monthly Escrow Estimates
Cash to Close
FHA 203(k) vs. HomeStyle — Same Purchase Scenario
| Feature | FHA 203(k)3.5% down · 1–4 units | HomeStyle3% down |
|---|---|---|
| Down Payment () | $17,850 (3.5%) | $15,300 (3%) |
| Est. Cash to CloseDown pmt + ~2% closing costs | $27,865 | $25,194saves $2,671 |
| Total Loan | $500,763 | $494,700 |
| Upfront MIP / Fee | 1.75% (financed) | None |
| Monthly Mortgage Insurance | $225.57 | $350.41 |
| MI Cancellation | Life of loan (if < 10% down) | At 80% LTV (automatic) |
| Est. Total Monthly P&I + MI | $3,187.77 | $3,276.75 |
| Monthly Payment Difference | $88.98/moFHA 203(k) saves $88.98/mo($1,067.75/yr · $32,032 over 30 yrs) | |
| Min Credit Score | 580 (3.5% down) | 620 |
| Max Loan (1-unit · Jackson County)Jackson County, OR | $541,287 | $832,750 |
| Min Down Payment | 3.5% | 3% |
| Luxury Upgrades | Not eligible | Allowed |
| HUD Consultant | > $35k renovation: required | Not required |
Comparison uses 30-yr fixed at 5.875% for both programs · 1-unit property. Limits: Jackson County, OR (2026 HUD/FHFA). PMI based on ~720 FICO. Actual rates vary.
One Loan Closes
Both FHA 203(k) and HomeStyle combine the purchase (or refinance) and renovation into a single mortgage. No separate construction loan required.
Renovation Funds in Escrow
Renovation money is held in an escrow account by the lender and disbursed to contractors as work is completed — keeping funds controlled and the project on track.
As-Improved Value Drives the Math
Loan amounts, LTV, and down payments are all based on the after-renovation appraised value — not just the purchase price. This lets buyers finance the renovation itself into the mortgage.
Renovation loan programs are complex. Both FHA 203(k) and HomeStyle require an approved appraiser to estimate the as-improved value, a detailed scope of work from licensed contractors, and lender draw management during renovation. Lumen Mortgage originates both programs in Oregon and California and can help you determine which fits your project and qualification profile.
The Process
How It Works
Identify Your Property & Scope
Find your property and get contractor estimates for the work you want done. We'll help you understand what's eligible under 203(k) vs. HomeStyle and which program fits your project and county.
Pre-Qualification
We review your credit, income, and target purchase price — plus the estimated renovation budget — to confirm your loan amount and determine which program is the right fit.
Contractor Bids & Scope Approval
Final loan approval requires a detailed scope of work and licensed contractor bids. For 203(k) Standard projects, a HUD-approved consultant oversees the scope and draw schedule.
As-Improved Appraisal
An appraiser reviews your renovation plans and estimates the home's finished value. Your loan is sized against this as-improved number — often unlocking significantly more borrowing power than the current price suggests.
Close & Begin Construction
At closing, the purchase funds are disbursed and renovation funds are placed in escrow. Your contractor begins work and draws funds in stages as milestones are inspected and approved.
Final Draw & Move In
Once work is complete and the final inspection is passed, the last draw is released to your contractor. You move into an improved home — financed in one clean transaction.
Requirements
General Qualifications
Ready to See If You Qualify?
Every borrower's situation is unique. Give us 15 minutes and we'll review your financial picture, identify every program you qualify for, and walk you through your options — at no cost and with no obligation.
Licensed in Oregon & California · NMLS #1498678
Related Programs
ADU Financing
Dedicated guide to financing accessory dwelling unit additions and conversions in Oregon and California.
FHA Loans
The FHA 203(k) is built on the FHA platform — learn about FHA's full range of benefits for Oregon and California buyers.
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Building a new home from the ground up? Our construction-to-permanent loans cover land and vertical build without a second closing.
FAQ
Common Questions
From the Blog
Further Reading
OregonConstruction Lending in Ashland & Southern Oregon: Custom Builds, Construction-to-Perm, Spec Loans, ADUs & Renovation Financing
Whether you're building a custom home in the Ashland hills, adding an ADU to your Medford lot, renovating a fixer in Talent, or breaking ground on a spec build in the Rogue Valley, Southern Oregon's construction lending landscape is more nuanced than most borrowers realize. Here's a complete guide to every financing tool available for builders, developers, and homeowners in 2026.
Loan TypesFHA vs. Conventional Loans: Which Is Right for You?
These two loan types cover the majority of home purchases in the U.S. — but they work very differently. Here's a side-by-side breakdown to help you make the right call.
OregonADU Loans in Oregon: Financing Accessory Dwelling Units Under the Middle Housing Land Division Law
Oregon's Middle Housing Land Division law quietly changed the investment calculus for ADUs across the state. Here's how to finance a detached ADU, what DSCR lenders look for, and why lot-splitting is becoming the most underrated wealth-building strategy in Oregon real estate.
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