Renovation Loans in the Sacramento Region

The FHA 203(k) program comes in two versions. HUD set the current rules in Mortgagee Letter 2024-13 (July 9, 2024), for FHA case numbers assigned on or after November 4, 2024.

• Limited 203(k) is for minor remodeling and nonstructural repairs. Total rehab costs can't exceed $75,000. A 203(k) consultant isn't required, though one may be used. The work must be done within nine months. HUD says the work counts as too big for the Limited version if, among other things, it keeps you out of the home for more than 30 days in total.
• Standard 203(k) is for major rehab, including structural work. It requires an FHA-approved 203(k) consultant, and the work must be done within 12 months. HUD's 203(k) partner page (checked October 22, 2026) says Standard rehab costs must be at least $5,000.

The Standard version can also include up to 12 months of mortgage payments if you can't live in the home during the work, per the same Mortgagee Letter. The Limited version can't. Our FHA loan page covers the base FHA rules.

CHOICERenovation is Freddie Mac's conventional renovation loan. Freddie Mac's fact sheet (checked October 22, 2026) lists it for purchases and no cash-out refinances on these homes:

• One- to four-unit primary residences
• Second homes
• One-unit investment properties
• Manufactured homes

The same fact sheet caps financed renovation costs at 75% of the lesser of the price plus renovation costs, or the as-completed value, on a purchase. For manufactured homes the cap is the lesser of $50,000 or 50% of the as-completed value.

One feature stands out for this region. The fact sheet says the money can be used to repair a home damaged in a disaster, or to protect it from a future one. Its examples include foundation retrofitting for earthquakes and retaining walls. Freddie Mac's FAQ (checked October 22, 2026) adds that it allows adding or renovating an accessory dwelling unit (ADU).

The repair money isn't handed to you at closing. It sits in an account and goes out in stages, called draws, as the work is finished and checked. Here's how the programs describe it:

• Fannie Mae HomeStyle: the Selling Guide (December 10, 2025) says funds are released only when a piece of work is complete, after an inspection confirms progress. Payment goes by a check made out jointly to you and the contractor, or by wire to the contractor with your written consent each time. Up to 50% of the planned renovation costs can be paid at closing as a first draw.
• Freddie Mac CHOICERenovation: the fact sheet says up to 50% of material costs can be drawn at closing.
• FHA 203(k) Standard: the 203(k) consultant writes up the work and inspects before draws, under HUD's Mortgagee Letter 2024-13.

You'll pick a contractor and get a written bid before closing, and the lender reviews it. Plan for that step to take time. Doing the work yourself is limited. Fannie Mae, for example, caps do-it-yourself work at 10% of the as-completed value on a one-unit home and won't pay you for your own labor.

It fits when you want to live in the home, or hold it as a rental, and the work is clear enough to bid before closing. It's slower to close than a regular loan, and it takes paperwork and a patient contractor.

It may not fit if you plan to tear the house down and build new, or if you're a short-term investor. A construction loan or a hard money loan may suit those better.

If you're on the selling side, with an inherited or dated home, renovation loans matter to you too. They let more buyers make offers on a home that needs work. See selling as-is or our turnkey home prep service if you'd rather fix it first. Because Maggie is a real estate broker as well as a mortgage broker, the house hunt, the bids and the loan can sit on one timeline.