By Hans Fetterhoff, Mortgage Broker, NMLS# 273273 — Broker House Mortgage, Colorado Springs

Renovation Loans in Colorado Springs, Colorado

A renovation loan is a single mortgage that finances the purchase of a home — or refinances the home you own — plus the cost of renovating it, all in one loan and one closing. The loan is sized on the home's after-improved value: what it will be worth when the work is done, not what it looks like today.

That one detail changes what you can buy. The dated kitchen, the worn roof, the bathroom last touched in 1987 — on a regular loan, those are reasons a home gets passed over or a deal falls apart. On a renovation loan, they're line items in a budget the mortgage itself pays for, with the repair money held in escrow and released to your contractor as the work is completed and inspected. Colorado Springs is full of solid older homes in established neighborhoods that need exactly this kind of financing, and renovation loans are a specialty of this office — not a sideline.

Ready to skip ahead? Call Hans at (719) 686-3652 or start your application online.

How does a renovation loan actually work?

The mechanics are the same across the main programs, and once you see them, the whole category makes sense:

1. You find the home and define the project. A fixer-upper you want to buy, or the home you already live in. Before the loan can be built, the work has to be scoped: what gets done, by whom, and for how much.
2. A contractor bid goes in up front. Your contractor provides a detailed bid for the full project before closing. The loan is built on that bid — not on a guess, and not on money handed to you to manage.
3. The appraiser values the finished home. The appraisal is done "subject to completion": the appraiser works from the plans and the bid and values the home as it will be after the renovation. That after-improved value is what the loan amount is based on.
4. One closing. The loan closes once, covering the purchase (or the refinance of your current mortgage) plus the renovation budget. The renovation funds sit in an escrow account controlled by the lender/servicer.
5. Draws pay for work as it happens. Your contractor completes a stage of work, an inspection confirms it, and funds are released — a "draw" — to pay for that stage. Nobody gets paid ahead of completed, inspected work, including an initial release at closing of up to 50% of material costs on some programs when materials are delivered and stored on site.
6. Final inspection, then a normal mortgage. When the work is done and the final inspection and completion paperwork are in, the escrow closes out. Any contingency money that wasn't needed is applied to your loan balance. From there, you simply have a mortgage — no second loan, no construction loan to refinance out of.

Practical tip from our office: the contractor bid is the foundation of the whole loan. A vague bid creates a vague loan. We review the bid for program eligibility before you're under contract deadlines — that's the step that keeps renovation loans boring, which is what you want them to be.

Which renovation loan programs are there — and how do they compare?

Five programs do nearly all of this work, and they are not interchangeable. Each has its own rules about who can borrow, what work counts, and how big the project can be. Here they are side by side (program rules verified October 27, 2026 — sources in our files; terms change, and we confirm them again when you apply):

Freddie Mac also offers a smaller sibling, CHOICEReno eXPress®, for cosmetic-scale projects: financed renovation costs are capped at 10% of the home's value (15% in designated Duty to Serve high-needs areas), and the work must be finished within 180 days. Think windows, doors, a roof repair, painting, and minor remodeling — with a much lighter process than a full renovation loan.

Which one fits you depends on three things: the size and type of the project, whether you'll live in the home, and your down payment and credit picture. That's a ten-minute conversation, and it's the conversation this office has constantly — bring us the address and the project and we'll tell you plainly which program we'd use and why.

Limited vs. Standard 203(k): which one fits my project?

Because the 203(k) is the program most buyers ask about first, the fork inside it deserves its own explanation.

Choose the Limited 203(k) when the work is real but non-structural: a kitchen or bathroom remodel, a new roof, HVAC replacement, windows, flooring, paint, appliances, energy improvements, repairs that make a tired house sound and livable. Key facts:

• Total rehabilitation costs capped at $75,000. (If you remember a $35,000 cap, that was the old rule — HUD raised it in Mortgagee Letter 2024-13, effective for case numbers assigned on or after November 4, 2024, and now reviews the cap annually.)
• No minimum project size.
• No structural work — nothing that moves or rebuilds the bones of the house, and no additions or ADUs.
• The work can't keep you out of the home for more than 30 days total during the project.
• A HUD 203(k) consultant is optional; if you use one, their fee can now be financed into the loan.
• Work must be completed within 9 months; under HUD's June 2026 update, your contractor can take up to four draws over the project instead of the old two.

Choose the Standard 203(k) when the project is structural or large: foundation work, room additions, moving walls, converting a garage, building an ADU, a gut renovation, or any project over the Limited cap. Key facts:

• $5,000 minimum in eligible repairs; no separate cap on the renovation itself — the total loan is limited by FHA's loan limit for the county and by the after-improved value (the mortgage can be based on up to 110% of that after-improved value, a Standard 203(k) feature that helps heavy projects pencil out).
• A HUD-approved 203(k) consultant is required. The consultant prepares the work write-up and cost estimates, and performs the draw inspections. Their fees are capped by HUD's published fee schedule and can be financed.
• Work must be completed within 12 months.
• If the home can't be occupied during the work, a mortgage payment reserve can be financed for the months you're out, up to the completion period HUD allows.

Honest framing: the Standard is more loan — more documentation, a consultant in the mix, a longer process — because the projects are bigger. When your project genuinely fits the Limited, take the Limited. When it doesn't, the Standard exists precisely so the project doesn't have to shrink to fit the financing.

What about VA renovation loans?

Yes — if you're VA-eligible, there is a renovation option, and it works the way you'd hope: one VA loan that finances the purchase (or a refinance) plus eligible renovation costs, with 100% financing — no money down for eligible borrowers. One honest note up front, because it matters: VA itself does not publish a standard renovation loan program the way FHA publishes the 203(k). This is a lender program offered through our wholesale lending partners, built on standard VA loan eligibility — which is why its specific caps and rules are the lender's, and why we state them as ours rather than as VA-wide rules.

Who it's built for: the Fort Carson and Peterson buyer who finds the almost-right house — right neighborhood, right commute to post, wrong kitchen, tired systems, a bathroom that needs to become accessible. Instead of passing on the house or draining savings after closing, you buy it with no down payment and finance the fixes in the same loan.

How our VA renovation program works:

• Minor, non-structural work only. Repainting, fixture swaps, accessibility upgrades like ramps and rails, and some components — including attached additions — can qualify. Structural repairs do not; if the project is structural, that's a 203(k) or conventional conversation.
• Renovation costs up to $75,000, with no minimum project size.
• Primary residence only — 1–2 unit homes, condominiums, and manufactured housing.
• One contractor, start to finish. The work is performed by a single general contractor who must be registered with the VA and carry a current general liability insurance policy.
• Work completed within 9 months of closing, with a final certification by a VA inspector when it's done.
• Standard VA rules underneath it all: normal VA borrower eligibility (veteran, active duty, or eligible surviving spouse), VA minimum property requirements, an appraisal that reflects the home's before-and-after value, and the standard VA funding fee — our VA loans page covers eligibility, entitlement, and the funding fee in full. With our program, the minimum qualifying credit score is 580, and terms run 10, 15, 20, 25, or 30 years, fully amortizing and fixed.

If you're PCSing in and the right house needs work before it's the right house, this is the conversation to have before you write the offer — the contractor registration and the project scope are part of the loan from the start, not an afterthought.

What work is eligible — and what isn't?

Generally eligible across programs: roof repair or replacement; HVAC, plumbing, and electrical work; kitchen and bathroom remodels; flooring, paint, and cosmetic updates; windows and doors; energy-efficiency improvements; health and safety repairs; accessibility and aging-in-place work (widened doorways, ramps, first-floor primary suites); and repairs that bring a home up to code and make it livable.

Program-dependent — this is where the rules actually differ:

• Structural work, additions, and ADUs: Standard 203(k), HomeStyle, and CHOICERenovation can finance them. The Limited 203(k) cannot — no structural changes and no accessory dwelling units. (CHOICERenovation also finances resilience work — things like storm hardening and wildfire/flood mitigation upgrades — which matters in parts of our area.)
• Luxury items: FHA 203(k) draws a hard line — items FHA considers luxury, such as a new swimming pool, are not eligible. The conventional programs are more flexible: HomeStyle and CHOICERenovation can finance improvements like a pool as long as they're permanently affixed to the property. If the dream project includes one, that's a real reason to choose the conventional route.
• Manufactured homes: eligible under HomeStyle and CHOICERenovation with reduced renovation caps and no structural changes. The 203(k) can work on manufactured homes that meet FHA's requirements as real property.
• Never eligible, anywhere: tearing down the existing home and building a new one on the lot (that's construction financing, a different product — see below), and personal property that isn't permanently affixed, other than appliances included in the project.

The recurring theme: eligibility is a per-program list, not a vibe. Send us the project list before you fall in love with a plan — we'll match each line item to the program that can actually pay for it.

What are the contractor rules?

Renovation loans run on contractor paperwork, and every program has its own version of the same core rules:

• Licensed contractor required. The work must be performed by a contractor (licensed where state/local law requires it — and your contractor is subject to lender review and approval before closing). On the Standard 203(k), one general contractor typically runs the project and manages any subcontractors.
• No DIY — with one narrow exception. FHA 203(k) work is contractor work; self-performed renovation is generally not allowed. Fannie Mae's HomeStyle is the exception: on a one-unit home (not a manufactured home), you may do the work yourself, but DIY costs are capped at 10% of the as-completed value, the lender must approve the plan in advance and inspect items over $5,000, and you can be reimbursed for materials and documented contract labor — never for your own sweat equity. If your plan is "we'll do most of it ourselves," that fact alone may decide your program.
• Bids up front, in detail. The contractor's bid — items, materials, labor, permits — is due before closing, because the loan, the appraisal, and the escrow are all built on it.
• Contingency reserve: plan on 10–20%. Every program holds back a cushion for the surprises older homes reliably produce. FHA 203(k) contingency ranges up to 20% of the renovation budget depending on the property's condition and utilities; HomeStyle runs up to 15% (a 10% reserve is required on two-to-four-unit properties, and lenders may set one on any project); CHOICERenovation requires at least 10%, rising to 15% if the utilities aren't operable. The reserve can be financed into the loan, and whatever isn't spent is applied to your principal balance at the end — it's a cushion, not a fee.
• Permits and inspections are part of the deal. Work that requires permits gets permits; draws are released against inspections, not promises.

Because the contractor is effectively a party to your loan, choose them like it: licensed, insured, experienced with renovation-loan draws (the paperwork cadence is different from a normal remodel), and realistic about timelines. We see the same local contractors on these files repeatedly and can tell you what working with the draw process actually demands of them.

How do draws and inspections work while the work is underway?

This is the part buyers worry about most, and it's simpler than it sounds:

1. At closing, the renovation money goes into escrow. On some programs, up to 50% of material costs can be released at closing when materials are being purchased and stored for the job — your contractor isn't floating the entire material bill out of pocket.
2. Work happens in stages defined by the bid and, on a Standard 203(k), the consultant's work write-up.
3. Your contractor requests a draw for a completed stage. An inspector — the 203(k) consultant on a Standard, or an inspector/appraiser arranged through the servicer on conventional loans — verifies the work is done and matches the bid.
4. Funds are released for that stage (with a small holdback on larger projects until final completion, per program rules), and the next stage begins.
5. At the end, there's a final inspection, final title and lien checks, and the completion certificate. Leftover escrow — including unspent contingency — goes to your loan's principal balance, and the escrow account closes.

Two honest notes. First, you make your regular mortgage payment during the renovation — the payment reserve options described above exist for projects where the home truly can't be lived in, and they're the exception, not the default. Second, draws are a process, with forms and scheduling: contractors who've never worked one sometimes find the cadence slow. One of the practical things a renovation-focused lender does is set expectations with your contractor before the first draw, so nobody's learning the system mid-project.

What does a renovation loan really cost — and how long does it take?

Straight answers, because this is where renovation loans get oversold elsewhere:

• More time before closing. The bid, the plans, the consultant (on a Standard), and the as-completed appraisal all happen before closing. A renovation purchase commonly takes longer to close than a standard purchase — plan the contract timeline with your agent accordingly, and get the contractor engaged early.
• Program-specific fees. A Standard 203(k) carries HUD-capped consultant fees (financeable). All programs can involve draw inspection fees, a title update at completion, and escrow administration through the servicer. None of this is hidden — it belongs in the estimate we build with you before you commit — but "same cost as a regular loan" is not a claim we'll make.
• Mortgage insurance differs by program. FHA loans carry FHA mortgage insurance: an upfront premium of 1.75% of the loan amount (usually financed) plus an annual premium paid monthly, which typically remains for the life of the loan when you put the minimum down. Conventional renovation loans use private mortgage insurance when you put less than 20% down — and PMI can be cancelled as you build equity. VA renovation carries no monthly mortgage insurance at all; the standard VA funding fee applies instead (see the VA section above). For some buyers, that single difference outweighs everything else in the comparison table.
• Completion deadlines are real. Limited 203(k): 9 months. Standard 203(k): 12 months. VA renovation (our program): 9 months. CHOICERenovation: 450 days from the note date. CHOICEReno eXPress: 180 days. Extensions exist in some programs for genuine delays, but they're approvals, not entitlements — pick a contractor whose schedule fits the clock.
• Not every lender offers these. Renovation lending is operationally heavy, and plenty of lenders either don't offer it or offer it with extra overlays. As a broker, we place renovation loans with wholesale lenders that actively want this business — the full FHA picture is on our FHA loans page.

Run preliminary numbers any time on our mortgage calculators — then let us build the real version, because a renovation budget has moving parts a generic calculator can't see.

Can I renovate a home I already own?

Yes — every program on this page works as a refinance as well as a purchase. You refinance your existing mortgage into a renovation loan, and the renovation budget is escrowed and drawn exactly as described above. On the conventional side, these are "no cash-out" refinance structures: the money goes to the project, not to your pocket, and the loan is based on the as-completed value of your home.

The cases we see most often in Colorado Springs: the family that loves the neighborhood and the schools but has outgrown a 1970s floor plan; the long-time owners whose home needs a roof, systems, and a kitchen in the same decade; and aging-in-place projects — a first-floor suite, an accessible bath, ramps and wider doors — that let someone stay in the home they intend to keep. If the alternative you're weighing is a home equity line or a stack of contractor financing, bring it in and we'll compare the structures honestly, including the cases where the equity line is genuinely the simpler tool. And if your current loan is a VA loan, the VA renovation option above works as a refinance as well as a purchase — same program, same rules — and our VA loans page covers the eligibility and funding-fee side of VA loans generally.

Why do renovation loans fit Colorado Springs so well?

Because so much of this city's housing stock is exactly the housing these programs were built for. Large parts of Colorado Springs were built between the 1950s and the 1990s, and the neighborhoods people most want to live in — Old Colorado City, Patty Jewett, the Westside, Ivywild, the older streets around downtown — are full of well-built homes with dated kitchens, aging roofs and systems, and floor plans from another era. Those homes sit in locations no new subdivision can copy, and they sell at a discount to renovated homes on the same street because most buyers can only offer on what the house is today.

A renovation loan changes who you're competing with. Fixer-uppers also attract cash investors, who can close fast and renovate with their own funds — and then sell or rent the finished product. A renovation loan is how an owner-occupant competes: one loan, based on the finished value, with a contractor budget built in. It won't beat cash on speed, and we won't pretend otherwise — but it puts a real offer on the table for a buyer who intends to live in the finished home, which is a story many sellers prefer.

There's a quieter second use we see just as often: staying put. Colorado Springs homeowners who bought years ago frequently hold a home (and a location) they don't want to give up, in a market where the move-up alternative is expensive. Renovating in place — an addition, an ADU for a parent or adult child, the accessibility work that makes the home work for the next thirty years — is often the better housing decision, and it's financeable in a single loan.

How is this different from building a new home with a one-time close loan?

Renovation loans fix an existing home. If your plan is to buy land and build a new house on it, that's a different product: a one-time close (OTC) construction loan, which finances the land, the build, and the permanent mortgage in a single closing, with the builder paid in draws during construction and the loan converting to a regular mortgage when the home is complete. Different appraisal, different builder requirements, different draw schedule — and no, a renovation loan cannot be used to tear down a house and rebuild it; every program on this page excludes that. If building is your plan, see our one-time close construction loans page. If the home exists and the bones are worth keeping, you're in the right place on this page.

A note for investors

FHA 203(k) is owner-occupant only — full stop. But the conventional programs open a door: HomeStyle allows one-unit investment properties (up to 85% of the as-completed value) and CHOICERenovation allows one-unit investment properties as well, so a purchase-plus-rehab for a rental can be financed in one loan instead of the usual short-term hard-money route. The renovation budget, contractor, and draw rules still apply in full — this is a program loan, not a handshake. Investors whose model is buy-and-hold may also want to look at DSCR financing for properties that don't need major work, and we'll happily run both structures on the same deal and show you which one the numbers favor.

Your next step

Renovation loans reward early conversations — the program choice, the contractor, and the bid all shape each other, and untangling them after you're under contract is the expensive way to learn that.

• Call (719) 686-3652 and talk with Hans about the property and the project. Bring the address and a rough scope; we'll tell you which program fits, what the bid needs to contain, and what the timeline honestly looks like.
• Or start the application online and note the renovation in your application — we'll route it to the renovation track from the first review.
• Buying your first home with a down payment assist and a renovation? Those pieces can interact with CHFA programs — see our CHFA page for the assistance side.
• Read more about Hans on his loan officer page.

You're Better Off With Fetterhoff.

By Hans Fetterhoff, Mortgage Broker, NMLS# 273273 — Broker House Mortgage

Last verified: October 27, 2026

Educational information only — not a commitment to lend. All loans are subject to credit review, underwriting approval, and property appraisal. Renovation loan program terms, caps, and completion deadlines shown were verified at the sources noted on October 27, 2026, and can change; confirm current terms when you apply. Renovation funds are disbursed through escrow against inspected, completed work; contractor bids and program eligibility are confirmed before closing.

Hans Fetterhoff | Mortgage Broker | CO License #100009597 | NMLS# 273273

Lender Works, LLP dba Broker House Mortgage | Company NMLS# 2002619

529 N Tejon St, Colorado Springs, CO 80903 | 719-686-3652 | brokerhousemortgage.com

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