A renovation loan combines the purchase price and the renovation cost of a DC rowhouse in one mortgage. This guide covers the three programs (FHA 203(k), Fannie Mae HomeStyle, and Freddie Mac CHOICERenovation), what they pay for, and the DC historic district rules that affect the budget for a rowhouse in Capitol Hill, Logan Circle, Dupont Circle, or Shaw.
Renovation loan compared with buying first and borrowing for the work later
An unrenovated rowhouse on Capitol Hill might list at $750,000 and need $150,000 in renovations. Without a renovation loan, you would:
- Buy the house with a traditional mortgage
- Take out a separate home equity loan or line of credit for renovations
- Or pay cash for the renovation
Right after a low-down-payment purchase you do not have enough equity for a $150,000 home equity loan, so the other route is $150,000 in cash on top of the down payment.
A renovation loan finances the purchase price plus renovation costs in one loan, sized on the home's projected after-renovation value.
FHA 203(k) renovation loan
How the FHA 203(k) loan amount is set
The FHA 203(k) mortgage is based on the lesser of your purchase price plus renovation costs or 110% of the after-renovation appraised value, with FHA's standard 3.5% minimum down payment.
Standard and Limited 203(k)
- Standard 203(k): For renovations over $75,000, or any structural work. Requires a HUD consultant to oversee the project. No maximum renovation amount (up to FHA loan limits).
- Limited 203(k): For renovations up to $75,000. No consultant required. Fits non-structural updates such as a new kitchen, bathrooms, flooring, and paint.
FHA 203(k) requirements
- Primary residence only
- 580+ credit score (3.5% down) or 500-579 (10% down)
- Licensed contractor must do the work; self-help is allowed only in narrow cases with lender approval
- Work must finish within 12 months (Standard) or 9 months (Limited)
- Property must meet FHA minimum property standards after renovation
FHA 203(k) in DC
- FHA loan limit in DC is $1,249,125 (2026), matching the high-cost conforming ceiling — purchase price plus renovation cost must fit under that limit
- Historic district rules can require specific materials or designs; include them in the renovation budget
- The 203(k) consultant fee is set by HUD's schedule (updated in 2024, scaling with the repair budget) and can be financed
Conventional renovation loans
Fannie Mae HomeStyle Renovation
- Up to 97% LTV for first-time buyers on a primary residence (95% otherwise); renovation costs capped at 75% of the as-completed value
- Loan limits track the conforming ceiling — $1,249,125 in DC for 2026
- Can be used for primary residences, second homes, and investment properties
- No HUD consultant required
- Renovation work can include luxury items (pools, landscaping) that FHA excludes
Freddie Mac CHOICERenovation
- Works like HomeStyle, with the same 97%/95% LTV structure and 75% renovation-cost cap
- Includes a resilience option for weather-related improvements
- Allowed on the same property types as HomeStyle
How conventional renovation loans differ from FHA 203(k)
- No mortgage insurance premium after reaching 20% equity (FHA charges MIP for the life of the loan)
- Allows items FHA excludes, such as pools and landscaping
- Can be used for investment properties
- No HUD consultant requirement
What renovation loans pay for
Work renovation loans cover
- Kitchen and bathroom remodels
- Structural repairs (foundation, roof, framing)
- Electrical and plumbing updates
- HVAC replacement
- Flooring, painting, drywall
- Windows and doors
- Accessibility modifications
- Energy efficiency improvements
Work FHA 203(k) excludes
- Luxury additions (swimming pools, outdoor kitchens)
- Commercial-use space
- Moving the structure to a new foundation
Renovation loan steps
- Get pre-qualified for a renovation loan and tell your loan officer about the project, so you know which renovation loan fits before you offer
- Find a property and make an offer contingent on renovation financing
- Get contractor bids for the planned work — you'll need detailed, itemized estimates
- Appraisal based on as-completed value — the appraiser reviews the renovation plans and estimates what the home will be worth after the work
- Close on the loan — renovation funds go into an escrow account
- Renovation begins — contractor draws funds from escrow as work progresses, with inspections at each draw
- Final inspection — once work is complete, remaining escrow funds are released
Renovation loan timeline
The contractor bids and the as-completed appraisal add steps before closing, so plan on a longer contract-to-close than a standard purchase. Budget 3-6 months for the renovation work after closing.
DC historic district rules
DC's historic districts have preservation requirements for exterior work:
Historic district rules that affect the renovation
- Exterior changes go through the Historic Preservation Review Board (HPRB)
- Some materials and designs may be required (e.g., wood windows instead of vinyl)
- Required materials add cost to the affected line items
- HPRB review covers exterior work; interior work does not go through HPRB
Budgeting for historic district requirements
Put the historic requirements into the renovation estimate from the start. A contractor who has worked on DC historic properties knows what HPRB requires and can bid accurately.
Steps for DC renovation buyers
- Ask about renovation financing before you offer: 203(k) and HomeStyle loans need contractor bids and an as-completed appraisal, so book a 15-minute call before you write an offer
- Get two or three contractor bids: Lenders require at least one detailed bid; more bids let you compare prices for the same scope
- Budget a 10-15% contingency: For repairs in an older home that are found once demolition starts
- Check the historic district overlay: Know what exterior work requires review before planning
- Check the after-renovation value: The loan is sized on the appraiser's projected value; if the finished home appraises above the loan balance, you have equity at completion, which is not guaranteed
- Renovate to neighborhood standards: The appraiser values the finished home against recent nearby sales, so spending beyond what those sales support may not add appraised value
