I’m Travis Buis, a loan officer with Elite Home Lending in Myrtle Beach. A rehab loan in South Carolina covers the house and the repairs together, which matters more on this coast than it sounds. In fact, plenty of the best-located homes on the Grand Strand are also the most tired ones.

What is a rehab loan?

It’s one mortgage that covers the purchase price plus the cost of repairs or upgrades. Lenders size it on what the home will be worth once the work is done, not just on today’s value.

So you get one closing and one monthly payment. You don’t have to buy first and then scramble to fund the work.

What types of rehab loans are there?

• FHA 203(k) Standard. For bigger projects, including structural work. A HUD consultant oversees the plan and the draws.
• FHA 203(k) Limited. For smaller, non-structural repairs and updates, with less paperwork.
• Conventional renovation loans. For example, Fannie Mae’s HomeStyle Renovation, which can also work for second homes and some investment properties.

What kinds of homes does this fit here?

Dated homes in good locations. Think older Surfside Beach and Garden City cottages, the aging homes around Conway, and beach properties with decades of salt air behind them.

It also fits storm damage a seller never fixed. You can sometimes still buy a house that fails an appraisal’s condition standards, because a rehab loan builds the repairs into the financing.

How does the money for the work get paid out?

First, the repair money goes into an escrow account. Then the lender releases it in draws as your contractor finishes each stage and an inspector signs off. So nobody hands you the full repair budget at closing.

That protects you as much as the lender. It also means you need to settle the scope before you close, rather than working it out as you go.

What does your contractor need to provide?

A license, insurance, and a written bid detailed enough for an inspector to check against. A friend who’ll do it for cash on weekends won’t work for this loan, however good they are.

So line up your contractor early. Finding one who will work within a draw schedule is usually the slowest part of the file, especially in season, when every good trade on the Strand has a full calendar.

Is a rehab loan the right tool?

If you’re buying, usually yes. However, if you already own the home and just need to fund the work, compare a HELOC and a cash-out refinance first.

Found a house that needs work? Get pre-qualified and bring me the property and a rough scope. Then I’ll tell you which version fits.

Rehab loan FAQ

What is an FHA 203(k) loan?

An FHA-insured mortgage that covers both the purchase and the cost of repairs in one loan. There’s a Standard version for bigger projects and a Limited version for smaller ones.

Can I do the work myself with a rehab loan?

Generally no. A licensed, insured contractor has to do the work, based on a detailed written bid.

How do rehab loans pay for the repairs?

The lender holds the repair money in escrow and releases it in draws as each stage passes inspection. That way your contractor receives payment in stages.

Can I use a rehab loan on a second home?

Some conventional renovation loans allow it. FHA 203(k) loans are only for a home you’ll live in as your primary residence.