A renovation loan lets you buy a house and borrow for the repairs in one mortgage, with the repair money held back and paid out as the work gets done. In Maryland the three you’ll hear about are FHA’s 203(k), Fannie Mae’s HomeStyle and Freddie Mac’s CHOICERenovation. They differ in how much repair money you can borrow, who has to review the work and what kind of property qualifies.
If you’re shopping for a fixer-upper, start on our buying page and tell us early that you plan to use one of these loans. It changes how we write the offer.
Limited vs Standard 203(k)
FHA’s 203(k) comes in two versions. HUD updated both in Mortgagee Letter 2024-13, effective for FHA case numbers assigned on or after November 4, 2024, and those rules were still current when I checked in October 2026.
| Limited 203(k) | Standard 203(k) | |
|---|---|---|
| Repair budget | Up to $75,000 total rehabilitation cost | $5,000 minimum; total loan within the county FHA limit |
| Type of work | Minor remodeling and nonstructural repairs | Major rehab, including structural work and additions |
| 203(k) consultant | Optional | Required |
| Time to finish | Up to 9 months | Up to 12 months |
| Can you move out during work? | No more than 30 days total | Yes; up to 12 months of mortgage payments can be financed while you can’t live there |
Sources: HUD 203(k) program page and ML 2024-13, as of October 2026.
FHA treats a job as “major,” and so not eligible for the Limited version, if it is expected to take more than nine months, needs more than two payments to any one specialized contractor, needs a consultant’s write-up or architectural plans because of appraisal repairs, or keeps you out of the house for more than 30 days. A new roof, kitchen, bath and paint usually fit the Limited loan. Moving walls, fixing a failing foundation or adding a room push you into the Standard.
HUD says it will review the $75,000 Limited cap every year alongside its loan limits. Its 2026 loan limit announcement (December 2025) set the one-unit FHA floor at $541,287 and the high-cost ceiling at $1,249,125, and I couldn’t find a change to the Limited cap in it. Your county’s limit sits between those two numbers, so ask your lender for the exact figure.
Like other FHA loans, a 203(k) is for people buying a home to live in. HUD’s loans page says the down payment can be as low as 3.5%.
HomeStyle and CHOICERenovation
These are the conventional versions. Fannie Mae’s HomeStyle Renovation caps renovation costs at 75% of the lesser of the purchase price plus renovation costs or the as-completed appraised value on a purchase. On a refinance it’s 75% of the as-completed value. (Selling Guide section B5-3.2-02, as of October 2026.)
The other big difference from FHA is occupancy. HomeStyle can be used on a one- to four-unit primary residence, a one-unit second home or a one-unit investment property. If you’re buying a rental, this is the one to ask about, which is also why it comes up on our investor page.
Freddie Mac’s CHOICERenovation uses the same 75% cap: the lesser of purchase price plus renovation costs or the as-completed value on a purchase. Freddie’s Guide gives standard CHOICERenovation loans 450 days from the note date to finish, with a possible extension of up to 90 days for delays outside the borrower’s and contractor’s control. (Guide sections 4607.7 and 4607.4, read October 2026 through a reproduction of the Guide text because Freddie’s own pages wouldn’t load.)
Not every lender offers all three. Ask any loan officer you talk to how many renovation loans they closed last year.
The bid and consultant process
On a Standard 203(k), the lender picks an FHA-approved 203(k) consultant from HUD’s roster. The consultant inspects the house and writes the Work Write-Up, a line-by-line list of each repair with a cost estimate. Your contractor’s bid gets compared against it.
ML 2024-13 caps what a consultant can charge:
| Consultant service | Maximum fee |
|---|---|
| Feasibility study (optional) | $375 |
| Work Write-Up, repairs up to $50,000 | $1,000 |
| Work Write-Up, repairs $50,001-$85,000 | $1,200 |
| Work Write-Up, repairs $85,001-$140,000 | $1,400 |
| Work Write-Up, repairs over $140,000 | 1% of repairs or $2,000, whichever is lower |
| Each draw inspection | $375 |
| Change order | $120 |
| Reinspection | $225 |
On a Limited 203(k) you can skip the consultant, and since November 2024 you can finance the fee if you use one.
What trips buyers up is the order things happen in. You need a signed contractor bid before the appraiser can value the house “as completed,” and you need that appraisal before the lender can approve the loan. On a vacant or rough house, getting a contractor through the door for a detailed bid can take a while. Line up a contractor before you write the offer.
Draws and inspections
You don’t get the repair money at closing. It goes into an escrow account and comes out in stages. HUD’s 203(k) page lays out the cycle:
- The contractor pulls the permits for each phase.
- When a phase is done, you ask the consultant for an inspection.
- The consultant checks the work and certifies it, and you both sign the draw release.
- The lender cuts a two-party check to you and the contractor.
Contractors who haven’t worked a 203(k) before are sometimes surprised that they get paid after the work passes inspection, not before. Ask whether they’ve done one. A contractor who can’t carry a phase’s labor and materials until the draw clears will stall your job.
Timelines that sink deals
Most renovation-loan deals that fall apart do so on the calendar. A few things to plan for:
- Your contract dates. A standard Maryland purchase contract assumes a normal loan schedule. Ask for more time, and make sure the financing contingency names the renovation loan.
- The appraisal. If the as-completed value comes in low, the repair budget shrinks with it, because all three programs tie the budget to that value.
- The completion deadline. Nine months on a Limited 203(k), 12 on a Standard, 450 days on CHOICERenovation. Permit delays count against you.
- Living arrangements. If you can’t live in the house during a Limited 203(k) job for more than 30 days, the job doesn’t qualify for the Limited loan at all.
Use a licensed MHIC contractor
In Maryland, most paid work on an existing home requires a license from the Maryland Home Improvement Commission. Check the license on the Commission’s license search before you sign. If a licensed contractor doesn’t finish the job, the MHIC Guaranty Fund can pay a homeowner up to $30,000 per claim, capped at what was paid to the contractor (as of October 2026). An unlicensed contractor gives you none of that. Our MHIC licensing guide explains how the license works.
Lenders also check the contractor. Expect them to ask for the license number, insurance and sometimes references.
A worked example
These numbers are made up to show the math. They aren’t a quote, and they aren’t based on any job we’ve done.
Assume you’re buying a Baltimore rowhouse for $220,000. Your contractor bids $60,000 for a new kitchen, a bathroom, a roof and flooring, with no structural work. The appraiser says the house will be worth $300,000 when it’s done.
- Limited 203(k): $60,000 is under the $75,000 cap and the work is nonstructural, so it qualifies if it can be finished within nine months and you won’t be out of the house for more than 30 days. The loan covers the purchase plus the $60,000, and the 3.5% minimum down payment is figured on that larger amount. Your lender runs FHA’s formula to get the exact loan size.
- HomeStyle: The cap is 75% of the lower of $280,000 (price plus repairs) or $300,000 (as-completed value), so 75% of $280,000, or $210,000. The $60,000 bid fits with room to spare. Down payment and rate depend on your credit and the occupancy type.
- If the appraisal comes in at $250,000 instead: the HomeStyle cap drops to $187,500, still enough, but your loan-to-value gets worse and the terms may change. On an FHA loan, a low appraisal can mean more cash at closing.
Affiliated business disclosure: Stephen Wilson owns Monarch Bay Renovations (MHIC #149066). You are never required to use it, and you can hire any licensed contractor.
If you’re buying a city rowhouse, our planned guide to buying a rowhome in Baltimore covers what to look at before you write the offer. If the house is vacant, read buying a vacant house in Baltimore first, since a Vacant Building Notice adds permit steps.
This is general information, not lending advice. Talk to a lender about your own numbers before you make an offer.
Bottom line
A Limited 203(k) is the simplest route for up to $75,000 of cosmetic and system work on a home you’ll live in. A Standard 203(k) handles the big jobs but adds a consultant and more paperwork. HomeStyle and CHOICERenovation are the ones to ask about if you’re buying a rental or a second home, or if your repair budget is large compared with the price. In every case, get the contractor lined up before the offer, leave room in the contract dates and check the MHIC license.
Sources
- HUD, Mortgagee Letter 2024-13, checked October 26, 2026
- HUD, 203(k) Rehabilitation Mortgage Insurance program, checked October 26, 2026
- HUD, FHA 2026 loan limits announcement (No. 25-145), checked October 26, 2026
- HUD, Loans, checked October 26, 2026
- Fannie Mae Selling Guide, B5-3.2-02 HomeStyle Renovation Mortgages, checked October 26, 2026
- Freddie Mac Guide 4607.7 and 4607.4, as reproduced by homebuyer.com, checked October 26, 2026
- Maryland Department of Labor, Maryland Home Improvement Commission, checked October 26, 2026