Finance Your
Dream Renovation
Whether you want to buy a fixer-upper and renovate it, remodel your existing home, or add an ADU, Theós Financial offers multiple loan programs to fund your home improvement projects — often with one simple mortgage payment.
Last updated: March 2026
Why Finance Your
Home Renovation?
Home improvements are one of the smartest investments you can make. A well-planned renovation can increase your home's value by far more than the cost of the project, improve your quality of life, and make your home more energy-efficient. But financing a major renovation can be challenging — especially when you would rather not drain your savings account.
Renovation financing allows you to spread the cost of improvements over the life of your mortgage at much lower interest rates than credit cards or personal loans. Whether you are planning a kitchen remodel, bathroom renovation, room addition, or complete home overhaul, there is a financing option that fits your situation.
For home buyers, renovation loans open up a world of opportunity. Instead of competing for move-in ready homes in a competitive market, you can purchase a less expensive fixer-upper and finance the renovations into your mortgage. This strategy often results in significant equity gain — you buy below market value, invest in improvements, and end up with a home worth more than you owe.
Theós Financial specializes in helping homeowners and buyers navigate the various renovation financing options. Our team will help you choose the right program, estimate your costs, and structure the loan for maximum benefit.
Financing Options for
Home Improvement
From government-backed rehabilitation loans to home equity solutions, we offer multiple ways to finance your renovation project.
FHA 203(k) Rehabilitation Loan
The FHA 203(k) is the premier renovation loan program. It allows you to purchase a home (or refinance your existing home) and finance the cost of renovations into a single FHA-insured mortgage. There are two versions of the program, each suited to different project sizes.
- Standard 203(k): For major renovations over $35,000 — structural repairs, room additions, major remodels, and complete rehabilitation projects
- Limited 203(k): For smaller projects up to $35,000 — cosmetic updates, kitchen and bath remodels, flooring, painting, appliances, and non-structural improvements
- 3.5% down payment (purchase)
- One loan, one monthly payment
- Credit scores as low as 580
- Available for 1-4 unit properties
Cash-Out Refinance
If you already own your home and have built up equity, a cash-out refinance lets you borrow against that equity and receive cash to fund renovations. You replace your existing mortgage with a new, larger one and receive the difference in cash.
- Access up to 80% of your home's value
- Use the cash for any renovation
- No restrictions on project type
- Lower rates than personal loans
- Interest may be tax-deductible
Home Equity Line of Credit (HELOC)
A HELOC gives you a revolving line of credit secured by your home equity. Draw funds as needed for your renovation project, only paying interest on what you borrow. This is ideal for phased renovation projects where you need flexibility.
- Revolving credit line
- Draw funds as needed
- Interest-only payment option
- Keep your existing first mortgage
- 10-year draw period typical
Conventional Renovation Loans
Fannie Mae's HomeStyle Renovation and Freddie Mac's CHOICERenovation are conventional alternatives to the FHA 203(k). They may offer better terms for borrowers with strong credit and higher down payments.
- No FHA mortgage insurance (with 20% down)
- Higher loan limits than FHA
- Renovation costs included in mortgage
- Primary, second home, and investment eligible
VA Renovation Loans
Eligible veterans can use VA renovation loans to purchase and renovate a home with $0 down payment and no PMI. This powerful program combines the benefits of VA financing with the flexibility of renovation funding.
- $0 down payment
- No PMI
- Competitive VA rates
- Purchase + renovation in one loan
How the FHA 203(k)
Renovation Loan Works
The FHA 203(k) is the most popular renovation loan. Here is how the process works from start to finish.
Find Your Property & Get Estimates
Identify the property you want to purchase (or refinance) and get detailed contractor bids for the renovation work. The bids should include materials, labor, and a timeline. For Standard 203(k) loans, a HUD-approved consultant will review the work plan.
Apply for the Loan
Submit your mortgage application with the renovation details. The lender will order an appraisal based on the "as-completed" value of the property — what the home will be worth after renovations are complete. This is key because your loan amount is based on the future value, not the current condition.
Close the Loan
Once approved, you close on the loan. The purchase price (or existing mortgage balance for a refinance) is funded, and the renovation funds are placed in an escrow account. You take ownership of the property and renovation can begin.
Complete the Renovation
Your contractor completes the renovation work according to the approved plan. Funds are released from escrow in draws as work is completed and inspected. For Limited 203(k) loans, funds are typically released after all work is complete. The renovation must be completed within 6 months of closing.
Renovation Projects That
Add the Most Value
Not all renovation projects are created equal when it comes to return on investment. Here are the projects that typically add the most value to your home:
- Kitchen Remodel: The kitchen is the heart of the home. A mid-range kitchen remodel typically recoups 70-80% of its cost at resale, and a minor kitchen refresh can return even more.
- Bathroom Renovation: Updated bathrooms are one of the top features buyers look for. Adding a bathroom or updating an existing one is almost always a smart investment.
- ADU (Accessory Dwelling Unit): In California, adding an ADU can significantly increase your property value and provide rental income. Theós Financial can help finance ADU construction through renovation loans.
- Roof Replacement: A new roof provides both functional protection and curb appeal. It is one of the highest-ROI projects you can undertake.
- Energy Efficiency Upgrades: New windows, insulation, HVAC systems, and solar panels reduce utility costs and increase home value. Some programs offer additional incentives for energy-efficient improvements.
- Structural Repairs: Foundation work, framing repairs, and structural improvements are essential for the long-term integrity of the property and are fully eligible under 203(k) financing.
- Landscaping & Curb Appeal: First impressions matter. Professional landscaping, new siding, and exterior improvements can dramatically improve your home's value and marketability.
Finance Your
ADU Construction
Accessory Dwelling Units are one of the hottest trends in California real estate. Here is how to finance yours.
What Is an ADU?
An Accessory Dwelling Unit (also known as a granny flat, in-law suite, or casita) is a secondary housing unit built on a single-family property. California has passed laws making it easier than ever to build ADUs, and they can add $100,000 or more to your property value while generating rental income of $1,500 to $3,000 per month.
Financing Options for ADUs
ADU construction can be financed through cash-out refinance (using existing equity), HELOC, FHA 203(k) renovation loans, or conventional renovation programs. The best option depends on your current mortgage, equity position, and construction budget.
ROI on ADU Investment
An ADU typically costs $100,000 to $300,000 to build in California but can add $150,000 to $400,000 in property value. Plus, monthly rental income can offset or even exceed your mortgage payment. It is one of the best real estate investments available to homeowners.
Ready to Transform
Your Home?
Whether you are buying a fixer-upper, remodeling your kitchen, or building an ADU, Theós Financial has the renovation financing solution for you. Get a free quote today.