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Renovation mortgage: what it means

A renovation mortgage is a home loan that combines, in one loan with one closing, the money to buy or refinance a home and the cost of renovating it. Freddie Mac, for example, buys conventional CHOICERenovation loans, which can pay for a new roof, a kitchen or bath remodel or an addition, and CHOICEReno eXPress loans for smaller projects.

In Spanish it is

Préstamo de renovación

Also written as: renovation loan · rehab loan · CHOICERenovation

A couple reads a leaflet together on the sofa at home.

Verified on October 17, 2026

4 official sources

See the whole dictionary

The full explanation

FHA has its own version, the 203(k) loan. According to HUD, this avoids typical construction lending with two loans; a construction loan is usually short-term.

An example

Mónica and José buy an older home that needs a new kitchen. With a renovation mortgage they have one loan and one closing for both the purchase and the remodel.

You will see it in…

Lender offers for buying a home that needs work
Program names such as CHOICERenovation or the 203(k)
Your contractor's contract and estimate

Words that go with it

You will rarely see this word alone. These are the ones that show up with it on the same papers.

More guides that use “renovation mortgage”

Still confused by a paper?

A HUD-approved housing counselor can walk you through it. Agencies usually charge little or nothing, many work in Spanish, and they do not sell you anything.

What a housing counselor does See free help

Official sources

We sum up what these official sources say, in plain words. We add no rules they do not state; when a rule changes, the definition and its date change.

1. Freddie Mac · CHOICERenovation Mortgages (external site) · in English · Verified on October 17, 2026
2. Freddie Mac · The ultimate guide to renovating your home (external site) · in English · Verified on October 17, 2026
3. HUD · Buying a house that needs rehabilitation or renovating your home? (203(k) consumer fact sheet) (external site) · in English · Verified on October 17, 2026
4. CFPB · Mortgages key terms: construction loan (external site) · in English · Verified on October 17, 2026