How to finance investment property renovations
                     How to finance investment 
property renovations
 As a real estate investor, can you get a rehab loan for an investment 
property? The answer is YES! There are various types of renovation 
loans for investment properties that investors can qualify for. Real 
estate investment is capital intensive and rehab loans help investors 
fund the purchase and renovation of residential properties.
 For short-term real estate investors, renovation loans for investment 
properties help them to quickly fix-and-flip properties. Long-term 
investors also benefit from renovation financing for rental 
investment properties.
 Renovation loan for investment property comes as a single 
mortgage package that comprises of property purchase and its 
rehabilitation costs. A rehab loan for property financing offers real 
estate investors quick funding and its payable based on agreed 
interest rates.
 Types of rehab loans
 Rehabilitation loans are also known as renovation loans for 
investment properties. They are majorly offered in various 
categories to cater to the needs of both short-term and long-term 
investors. The most common types of rehab loans include;
1. Hard money renovation loans
 Hard money renovation loans are suitable for real estate investors 
seeking short-term financing options. Short-term investors mostly 
deal with fixer-upper properties. Unlike the traditional lenders who 
pay attention to your credit score and income, hard money lenders 
make loan approval decisions based on the value of the collateral 
provided.
 Hard money lenders offer different lending rates and investors can 
get financing of up to 75% of the property’s after repair value (ARV). 
Although hard money renovation loans attract higher interest rates 
and shorter repayment periods, they are processed much faster and 
you can get the required financing within a few days.
2.  Investment property line of credit
 Investment property line of credit renovation loan is tailor-made for 
real estate investors who own properties that require constant 
financing. The investment property line of credit operates the same 
as the home equity line of credit.
 If an investor already owns a property, they can use the home 
equity to finance renovations of their newly acquired properties. 
Lenders allow investors to borrow a certain percentage of their 
property’s equity multiple times.
 An investment property line of credit is secured by the already 
owned property and it’s usually offered at a lower interest rate. In 
addition, investors enjoy longer repayment periods for up to 30 
years.
 To qualify for an investment property line of credit, real estate 
investors must have a high credit score, considerable equity in the 
property as well as a low debt-to-income ratio.
3. FHA 203 (K) permanent renovation loan
 Federal Housing Administration (FHA) 203 (K) loan is suitable for real 
estate investors who would like to renovate a home for their own 
use. It’s a better option since investors get financing as one 
mortgage package as opposed to applying for multiple loans.
 FHA 203 (k) loans allow investors to finance the purchase and 
renovation costs of a property as a package.
 Since 203 (k) renovation loans are insured by the FHA, they are 
offered to real estate investors at affordable interest rates and 
longer repayment periods.
 For any investor to qualify for FHA 203 (k) loan, they must engage 
an FHA approved lender and have a credit score of 500 and above. 
Also, the cost of home renovations must be at least $5,000 and the 
property value should be within the recommended FHA mortgage 
limit in your area.
4. Fannie Mae homestyle renovation loan
 For those investors who are looking for flexibility, this home 
renovation loan is another great choice. It allows investors to borrow 
up to 85% of their home value after renovations or after repair value 
(ARV).
 However, it’s a must that all renovations be completed by an 
approved contractor.
 An appraisal of the renovations is also required before the 
contractor gets paid. Also, Fannie Mae Homestyle renovation loan 
requires a higher down payment compared to FHA 203 (k) loans.
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