What Are Renovation Loans?
Renovation loans provide the capital you need to improve a property. This can be a single-family home, a multi-unit building, or a commercial space. These loans cover a range of projects, including:
- Fix-and-flip properties: Purchase distressed properties, renovate them, and sell for a profit
- Rental property improvements: Upgrade units to attract higher-paying tenants
- Commercial renovations: Modernize office spaces, retail properties, or mixed-use buildings
- Structural repairs: Fix foundational issues, roofing, plumbing, or electrical systems
- Cosmetic upgrades: Improve curb appeal with landscaping, new flooring, or updated kitchens and bathrooms
What Are the Different Types of Renovation Loans?
Not all renovation loans are the same, and the right choice depends on your project, timeline, and financial situation. Here are some of the more common options:
- Hard Money Loans: Hard money loans are a favorite among real estate investors because they prioritize the property’s value over the borrower’s credit history. These loans offer fast approval and funding, making them perfect for fix-and-flip projects, rental property improvements, or urgent renovations. While interest rates are higher than traditional loans, the speed and flexibility make hard money loans a go-to option for time-sensitive investments.
- FHA 203(k) Loans: Backed by the Federal Housing Administration, these loans allow homebuyers to finance both the purchase and renovation of a property. They come with lower interest rates but require extensive documentation and FHA approval for contractors.
- Home Equity Loans & HELOCs: If you already own a property with significant equity, a home equity loan or home equity line of credit (HELOC) can provide funds for renovations. Home equity loans typically offer lower interest rates but require strong credit and a lengthy approval process.
- Cash-Out Refinancing: This option lets you replace your existing mortgage with a new one at a higher amount, using the extra cash for renovations. It works well for homeowners who qualify for a favorable interest rate but is not ideal for short-term investment projects.
Each loan type has its pros and cons, but if your project demands quick access to capital with minimal red tape, a hard money loan might be the best fit.
How Do I Know if a Hard Money Loan is the Best Renovation Loan for My Situation?
Choosing the right home renovation loan depends on several factors, including your project timeline, budget, and ability to qualify for different renovation loan options. While traditional home improvement loans work well for homeowners with time to spare, investors and flippers often need fast, flexible financing. That’s where a hard money loan comes in.
A hard money loan might be the right choice if:
- You need fast funding: Unlike mortgage lenders, which take weeks or months to approve a loan, a hard money loan can close in days.
- Your project is an investment: If you’re flipping a property or refinancing after renovations, a hard money loan helps you access capital without being tied to your existing mortgage.
- You need short-term financing: We offer a 1-year standard term with 6-month extensions available, making it ideal for investors working on quick turnarounds.
- You want to finance both the purchase and renovation: We lend up to 85% of the purchase price and typically cover 100% of renovation costs, ensuring you have the funds to complete your renovation project.
- You’re working with an LLC: We require that the property be owned in an LLC rather than under a personal loan structure.
Before securing a hard money loan for your home improvement projects, you’ll need to meet the following requirements:
- First lien only: West Forest Capital must be the primary lender.
- Property must be in an LLC: Loans are not made to individuals.
- New appraisal required: A new appraisal is ordered by West Forest Capital, though an existing appraisal may be accepted on a case-by-case basis.
- Lender title insurance: Required to protect against title defects.
- Insurance policy: West Forest Capital must be listed as the loss payee and additional insured.
- Builder’s risk insurance: Required for extensive renovation projects.
Fast, Flexible Financing for Your Renovation at West Forest Capital
If you need financing home improvements without delays, a hard money loan can help you move forward quickly. At West Forest Capital, we offer competitive rates starting at 10% for interest-only loans, with amortization options available. Borrowers pay a 1.5%–2% origination fee, and terms include a standard 1-year loan with the option for a 2-year term or 6-month extensions. Loan amounts are capped at 75% of ARV, providing flexibility while keeping risk manageable.
If you’re flipping a property, making home improvements, or taking on a large-scale renovation project, our team provides the speed and reliability you need. Contact us today to discuss your loan options and get started on your next investment.
