A renovation loan has more steps than a regular mortgage, but none of them are complicated when someone walks you through them. Here's the full process.
1. Consultation and pre-qualification (days 1–3)
We review your income, credit, and savings, and ask what kind of house and project you have in mind. You leave with a pre-qualification letter and a clear budget: the maximum purchase price plus renovation you can take on, and which program fits.
2. House hunting with renovation in mind
Your agent shows you the houses other buyers are passing over. When you find one, you write an offer with enough time in the inspection period to get a contractor through the house. In Pennsylvania, a 10- to 15-day inspection contingency is common. Ask your agent to allow enough time to get a contractor through the house.
3. Contractor bid and scope of work (about 2–3 weeks)
- FHA 203k Standard: a HUD-approved consultant inspects the house and writes the scope of work and cost estimate. Your contractor bids against that scope.
- FHA 203k Limited, HomeStyle, CHOICERenovation, and VA: your contractor's detailed, itemized bid becomes the scope of work.
We review the contractor's license, insurance, and references, and check that the bid is realistic for Philadelphia labor and material costs.
4. As-completed appraisal (about 1–2 weeks)
The appraiser reviews the plans and bid and values the house as if the renovation were already finished. That value sets how much can be financed.
5. Underwriting and closing (about 2–3 weeks)
Underwriting approves you, the property, the contractor, and the project together. At closing, the purchase is paid off and the renovation money goes into an escrow account.
6. Renovation and draws (1–12 months, depending on the program)
In Philadelphia, building permits come from the Department of Licenses and Inspections (L&I). Suburban work is permitted by each township or borough. As the contractor finishes stages of work, they request a draw. An inspector confirms the work, and the draw is paid. When the last inspection is done, any unused contingency is applied to your loan.
What it costs to get started
Nothing. The consultation is free, and there's no cost to get pre-qualified.
Frequently asked questions
How long does a renovation loan take to close?
Most purchases close in 45 to 60 days. The contractor bid, the scope of work, and the as-completed appraisal all need to be finished before underwriting can give final approval.
When does the renovation start?
After closing. Your contractor can start as soon as permits are issued. Many contractors apply for permits during the loan process so work can begin within a couple of weeks of closing.
Can I choose my own contractor?
Yes, as long as they're properly licensed and insured, and willing to work under a draw schedule. If you don't have one, we can point you to contractors who've completed renovation loans with us.
What if the renovation costs more than expected?
Every renovation loan includes a contingency reserve, usually 10–20% of the construction cost, for surprises found once walls are opened. Unused contingency goes toward your loan balance.