What you'll need
- Price or current value, and the value after the work
- The contractor's bid and fees
- Your mortgage balance and rate (to compare ways to pay)
- Rate quotes, or start from the labelled examples
What you'll get
- Largest 203(k) and HomeStyle loan — And the rule that limits it
- Cash to close and monthly payment — With MIP or PMI
- Five ways to pay compared — Monthly, interest, upfront, total
- The promo cliff — Back-dated interest if you miss it
Which mode do you need?
- Buying a fixer-upper, or refinancing to fix one up: a renovation mortgage puts the house and the work in one loan, sized partly on the value after the work. Mode A sizes an FHA 203(k) and a Fannie Mae HomeStyle loan on the same numbers.
- Keeping your mortgage and borrowing for a project: mode B prices the same project as a HELOC, a home-equity loan, a cash-out refinance, a personal loan and contractor promo financing.
- Building a new house? This calculator does not cover it. Use the construction loan calculator instead.
Worked example: 203(k) vs HomeStyle on a $250,000 house
These are the calculator's defaults: $250,000 purchase, $40,000 contractor bid, $1,500 of permits, inspections and title updates, 10% contingency, $300,000 value after the work, one unit, credit score 680–699, 30 years at 7.40% (example input).
- Rehab: $40,000 + $1,500 = $41,500, plus 10% contingency of $4,150 = $45,650.
- Limited 203(k): the lesser of $250,000 + $45,650 = $295,650 and 110% × $300,000 = $330,000, times 96.5% = $285,302. Cash to close before closing costs: $10,348. The 1.75% upfront premium ($4,993) is added to the loan; annual MIP is 55 bps because the base loan is 95.10% of the after-improved value: $130.76 a month. Payment: $2009.94 principal and interest + MIP = $2140.71.
- HomeStyle: sized on the lesser of $300,000 and $250,000 + $45,650 = $295,650. The work is well under 75% of that ($221,738). At a 95% LTV the loan is $280,868, so cash to close is $14,783. PMI at 95% LTV and 680–699 is 0.96% a year: $224.69 a month. Payment: $1944.67 + PMI = $2169.36.
A harder case: $90,000 of work. On a $200,000 house worth $270,000 afterwards, with a $1,000 consultant and $1,500 of fees, the rehab total is $101,750: over the Limited 203(k)'s $75,000 cap, so it must be a Standard 203(k). There, price plus rehab ($301,750) is more than 110% of the after-improved value ($297,000), so the value test binds: 96.5% × $297,000 = $286,605, with $15,145 cash to close. HomeStyle sizes on the $270,000 as-completed value: $256,500, with $45,250 cash.
Worked example: five ways to pay for a $40,000 project
Mode B defaults: a $400,000 home with $250,000 left at 3.5% and 300 months to go, an 85% CLTV limit, and the example rates below. Total cost is everything paid beyond the $40,000.
| Option | Terms (example inputs) | Monthly | Total cost |
|---|---|---|---|
| HELOC | 7.00%, 10-yr draw, 20-yr repayment | $233 | $62,429 |
| Home-equity loan | 8.00% fixed, 15 yrs | $382 | $28,807 |
| Cash-out refinance | 7.40%, 30 yrs, $6,000 costs | $2,049 | $322,332 |
| Personal loan | 11.86%, 5 yrs, no fee | $887 | $13,217 |
| Contractor promo (deferred interest) | 12 months, then 22.15%, paying $3,000/mo | $3,000 | $5,568 |
| Same promo as a true 0% offer | 12 months, then 22.15%, paying $3,000/mo | $3,000 | $94 |
- Cash-out refinance: the new loan is $250,000 + $40,000 + $6,000 = $296,000 at $2,049 a month, $798 more than today. Over 360 months you pay $322,332 more than keeping the 3.5% loan for its last 300 months and taking nothing out. Giving up a low rate on the whole balance is what makes it the costliest row here.
- HELOC vs home-equity loan: the HELOC's draw-period payment is lowest ($233, interest only), but stretched over 30 years it costs more in total than the 15-year fixed loan. Its rate is variable.
- The promo cliff: $3,333 a month clears the $40,000 inside 12 months with no interest. At $3,000 a month, $4,000 is left, and a deferred-interest plan adds $5,205 of interest back-dated to the purchase. The same offer as a true 0% plan would cost $94.
payment = P × r × (1 + r)^n ÷ ((1 + r)^n − 1), r = rate ÷ 12
cash-out extra cost = new payment × new months − old payment × months left − project
deferred interest = Σ (balance each promo month × APR ÷ 12), charged if any balance is left
Methodology and sources
- 203(k): HUD Handbook 4000.1, Update 18 (issued August 12, 2026), section II.A.8.a, 203(k) Rehabilitation Mortgage Insurance Program, read 2026-10-30. Maximum mortgage, Limited $75,000 cap, Standard $5,000 minimum, contingency limits (up to 20%; 10% minimum on a Standard 203(k) for homes 30+ years old) and the MIP LTV on the after-improved value are applied as written there. https://www.hud.gov/sites/default/files/Housing/documents/40001-hsgh-Update-18.pdf
- FHA MIP: HUD Mortgagee Letter 2023-05 (annual MIP, effective March 20, 2023), read 2026-09-30; 1.75% upfront, financed.
- HomeStyle: Fannie Mae Selling Guide B5-3.2-02, HomeStyle Renovation Mortgages: Loan and Borrower Eligibility (12/10/2025; Guide published Oct. 7, 2026) (75% renovation-cost limit and the LTV basis) and Fannie Mae Selling Guide B5-3.2-04, HomeStyle Renovation Mortgages: Costs and Escrow Accounts (12/10/2025; Guide published Oct. 7, 2026) (no contingency required on one unit; 10% on 2–4 units; the lender may go to 15%), read 2026-10-30. https://selling-guide.fanniemae.com/sel/b5-3.2-02/homestyle-renovation-mortgages-loan-and-borrower-eligibility
- HomeStyle maximum LTV: your input (example 95%). The Guide refers lenders to the Eligibility Matrix for it, which returned an access error when we tried it on 2026-10-30.
- PMI: National MI (National Mortgage Insurance Corporation), Monthly Advantage BPMI rate card, primary residence, fixed rate, card MA.MN.BP.2022-03, effective 2022-03-01, read 2026-09-29. One-unit card; adjustments for 2–4 units are not modelled.
- Example rates (inputs, not quotes): Freddie Mac PMMS 30-year fixed average, week of October 8, 2026 (7.40%), read 2026-10-15; Bank prime loan rate, Federal Reserve H.15 (October 29, 2026; released October 30, 2026) (7.00%); Commercial bank rate on 24-month personal loans, Federal Reserve G.19 (Q2 2026; released October 7, 2026) (11.86%); Credit card plans, accounts assessed interest, Federal Reserve G.19 (Q2 2026; released October 7, 2026) (22.15%). The home-equity loan example is prime plus one point. Fed rates read 2026-10-30.
- The CLTV limit (example 85%) and the $6,000 cash-out closing costs are example inputs; lenders set the first, and the Loan Estimate gives the second.
- Not modelled: financed 203(k) origination fees and payment reserves (HomeStyle allows up to six months of payments), closing costs on the renovation mortgages, taxes and insurance, rate changes on a HELOC, and the daily-balance method card issuers use for deferred interest (monthly here, a difference of a few dollars).
Related calculators
For a HELOC on its own, with interest-only and repayment schedules, use the HELOC calculator. The plain FHA purchase payment is in the FHA loan calculator. To price the work itself, start with the home renovation cost calculator.
Frequently asked questions
How much can I borrow with a 203(k) loan?
For a purchase, HUD caps the base loan at 96.5% of the lesser of the price plus the rehab costs, or 110% of the after-improved value. A $250,000 house with $41,500 of work and fees and a 10% contingency comes to $295,650, so the largest Limited 203(k) base loan is $285,302, with $10,348 cash to close before closing costs.
Is a 203(k) or a HomeStyle loan better?
It depends on your down payment, credit and the size of the job. On the same $250,000 house, the 203(k) lends $285,302 and HomeStyle $280,868 at a 95% LTV, so the 203(k) needs less cash. HomeStyle's PMI can be removed later; FHA's annual premium usually stays for the life of the loan. HomeStyle also allows larger jobs and has no $75,000 Limited cap.
What is the cheapest way to pay for a $40,000 renovation?
With a 3.5% first mortgage you keep, the cash-out refinance is usually the most expensive: at the example rates it costs $322,332 more over its life than keeping the mortgage. A 15-year home-equity loan costs $28,807 in interest, a 5-year personal loan $13,217, and a 12-month promo plan nothing if you pay $3,333 a month. Enter your own quotes: the ranking changes with rates and terms.
What happens if I don't pay off a deferred-interest promo in time?
All the interest that built up during the promo is charged, back-dated to the purchase. Paying $3,000 a month on a $40,000 job with a 12-month promo leaves $4,000 at the end and triggers about $5,205 of interest at a 22.15% APR. A true 0% offer would charge interest only on the $4,000 from then on.
Can I use this for a new build?
No. This calculator is for improving an existing home. For a new house, use the construction loan calculator, which models the draw schedule and the permanent mortgage after the build.