Renovation Loans in California: FHA 203(k), HomeStyle and CHOICERenovation

By Matthew Martinez, Founder, CEO & Managing Broker, Diamond Real Estate Group. California DRE #01869679.

A renovation loan lets you finance the purchase of a home (or a refinance) and the cost of repairing it in one mortgage, with the repair money held back and paid out as work is completed. The three main options are FHA’s 203(k), with a Limited version for non-structural work up to $75,000 and a Standard version for bigger projects, Fannie Mae’s HomeStyle Renovation, and Freddie Mac’s CHOICERenovation and CHOICEReno eXPress. Each one needs contractor bids, lender approval of the scope and, in California, a licensed contractor and permits for most work, so plan the renovation before you write the offer.

How a renovation loan works

Instead of buying a home and then finding money for repairs, you borrow against the home’s projected value after the work. The basic sequence is the same across programs:

Scope and bids. You (and, on a Standard 203(k), a HUD-approved consultant) define the work, and a contractor prices it.
"As-completed" appraisal. The appraiser values the home as if the work were done, from the plans and bids.
Closing. The purchase is paid off at closing. The renovation funds go into an escrow or custodial account, not to you.
Draws and inspections. The lender releases money as work is inspected and completed.
Final inspection. The lender confirms the work matches the approved scope.

That process adds documents and time to your escrow, so build it into your loan contingency and appraisal contingency deadlines.

Program comparison

	FHA Limited 203(k)	FHA Standard 203(k)	Fannie Mae HomeStyle Renovation	Freddie Mac CHOICEReno eXPress
Work allowed	Minor remodeling and non-structural repairs	Major rehabilitation, including structural work and additions	Renovations the lender approves	Smaller-scale renovations
Renovation amount	Up to $75,000; no minimum	No maximum renovation cost; minimum $5,000; total value within the FHA limit for the area	Purchase: up to 75% of the lesser of price plus renovation costs, or as-completed value	Up to 10% of value, or 15% in Duty to Serve high-needs areas
Consultant	Optional	Required (HUD-approved)	Not required by program	Not required by program
Occupancy	See HUD and your lender	See HUD and your lender	Principal residence 1–4 units; second home or investment, 1 unit	Primary 1–4 units; second home or investment, 1 unit
Manufactured homes	Real-estate-titled, no structural work	Real-estate-titled, no structural work	Eligible; renovation capped at 50% of as-completed value, no structural changes	Eligible

Sources: HUD 203(k) program page and HUD 203(k) consumer fact sheet (revised November 4, 2024); Fannie Mae Selling Guide B5-3.2-02; Freddie Mac CHOICEReno eXPress. Program limits change; confirm the current figure with your lender.

FHA 203(k): Limited and Standard

HUD’s consumer fact sheet lists eligible properties as single-family homes (including homes with eligible ADUs), two- to four-unit properties, townhomes, condominium units (work limited to the interior), manufactured homes titled as real estate when the work doesn’t affect structural components, HUD homes, and mixed-use properties that are at least 51% residential.

Eligible improvements include plumbing, heating, cooling and electrical systems; additions; finishing attics and basements; kitchen and bath remodels; roofing, siding and gutters; accessibility and energy upgrades; windows and flooring; structural repairs; ADUs; and converting a single-family home to two to four units.

Limited 203(k) covers non-structural work up to $75,000 with no minimum. A consultant is optional.
Standard 203(k) covers structural or major work with no maximum renovation cost and a $5,000 minimum, and requires an FHA-approved 203(k) consultant. The property’s total value must still fall within the FHA mortgage limit for the area.

Look up the current limit for your county in HUD’s FHA mortgage limits tool, which lists calendar-year 2026 limits. Limits vary across Sonoma, Napa, Marin, Sacramento and the other counties we serve, and HUD resets them each year. Find a consultant through HUD’s 203(k) consultant search. HUD’s fact sheet also says building permits must be obtained before work begins and posted on site.

For a HUD-owned home you plan to fix, see buying HUD homes.

Fannie Mae HomeStyle Renovation

According to Fannie Mae’s Selling Guide:

Occupancy: principal residences of one to four units; one-unit second homes and investment properties.
Maximum renovation cost: on a purchase, 75% of the lesser of the purchase price plus renovation costs or the as-completed appraised value; on a refinance, 75% of the as-completed value. Manufactured homes are capped at 50% of as-completed value, and structural changes such as adding a garage aren’t allowed. Fannie Mae’s product page also lists a $50,000 cap for manufactured homes.
Condos, co-ops and PUDs: the project must be eligible, condo and co-op work is limited to the unit interior, and the HOA or co-op must allow it in its bylaws or approve it in writing.
Do-it-yourself work: allowed on one-unit properties (not manufactured homes), limited to 10% of as-completed value, with lender pre-approval and inspection of any item over $5,000. Reimbursement covers materials and documented contract labor, not your own labor.
Payments while you can’t live there: up to six months of principal, interest, taxes, insurance and association dues can be included as a renovation cost on a principal residence.

Freddie Mac CHOICERenovation and CHOICEReno eXPress

Freddie Mac’s CHOICERenovation mortgage covers purchases and no cash-out refinances of one- to four-unit primary residences, one-unit second homes and one-unit investment properties, plus manufactured homes, PUDs, condos, co-ops (where allowed) and leasehold estates. It is underwritten through Loan Product Advisor and requires a final inspection (Form 442). Freddie Mac’s page points to Guide Chapter 4607 for the maximum renovation amount; ask your lender for the current figure.

CHOICEReno eXPress is the smaller-project version. Financed renovation costs can’t exceed 10% of value, or 15% in Duty to Serve high-needs areas, and the renovations must be completed within 180 days of the note date.

Contractors and permits in California

Lenders review your contractor, and California law sets its own rules.

License. The Contractors State License Board says a license is required for work valued at $1,000 or more in combined labor and materials, for work that needs a building permit, or where the contractor uses employees (CSLB). Check every license, and any home improvement salesperson’s registration, on CSLB’s license lookup.
Down payment. On a home improvement contract, the down payment can’t exceed $1,000 or 10% of the contract price, whichever is less, and progress payments can’t run ahead of the work performed (CSLB, What Is a Contract).
The written contract should describe the work and materials, state the payment schedule, say who pulls permits, give a completion date, require signed change orders, and list the contractor’s name, address and license number.
Permits. CSLB notes that almost any building, alteration or repair work needs a permit from the local building department. Requirements differ by city and county, so check with the jurisdiction where the home sits. In parts of Marin, design review applies too; see Marin County renovation and design review.

If the home you’re buying already has unpermitted work, the lender and appraiser may treat it differently from permitted space; see unpermitted ADUs and buying a home with an ADU.

Realistic timelines

Renovation loans usually take longer to close than standard loans because of bids, consultant reports (Standard 203(k)), the as-completed appraisal and lender review of the contractor. Practical steps:

Before the offer: get pre-approved specifically for the renovation program, and line up a licensed contractor who has worked with renovation lenders.
During escrow: schedule inspections and contractor walk-throughs early. A termite report and general inspection help set the scope. Negotiate seller repairs separately through a request for repair if needed.
After closing: permits, construction and draw inspections. The 180-day completion rule applies to CHOICEReno eXPress; for other programs, ask your lender for the completion deadline and draw schedule in writing.

Questions people ask

What is the difference between a Limited and a Standard 203(k)?

Limited covers non-structural work up to $75,000 with an optional consultant. Standard covers structural or major work with a $5,000 minimum and no maximum renovation cost, requires a HUD-approved consultant, and the total value must fit within the area’s FHA limit.

Can I use a renovation loan on an investment property?

Fannie Mae HomeStyle and Freddie Mac CHOICERenovation allow one-unit investment properties. The HUD pages cited here don’t address investor use of 203(k), so ask an FHA-approved lender about occupancy rules before planning around it.

Can I do the work myself?

HomeStyle allows limited do-it-yourself work on one-unit properties, up to 10% of as-completed value, with lender approval. Otherwise, plan on a licensed contractor; California requires one for jobs of $1,000 or more.

Can I renovate a condo with these loans?

Yes, with limits. FHA 203(k) and HomeStyle restrict condo work to the unit interior, and HomeStyle requires the HOA to allow or approve it. Check the CC&Rs.

How much can my contractor ask for up front?

In California, no more than $1,000 or 10% of the contract price, whichever is less, under CSLB’s home improvement contract rules.

Do renovation loans work for manufactured homes?

Sometimes. FHA 203(k) requires the home to be titled as real estate with no structural work, HomeStyle caps renovation at 50% of as-completed value with no structural changes, and Freddie Mac lists manufactured homes as eligible. Our Buying Process guides cover manufactured home titling and park rules in more detail.

Where can I find the FHA loan limit for my county?

Use HUD’s FHA mortgage limits lookup, which shows limits by county and year.

Sources & notes

Note: The maximum CHOICERenovation renovation amount (Freddie Mac Guide Chapter 4607) and FHA 203(k) completion deadlines and contingency reserve rules are not stated on the pages above, so ask your lender for them. Individual lenders may add their own requirements. No interest rates are quoted here.

General information, not legal, tax or lending advice. Updated November 2026. Primary sources are linked in this guide.

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