Renovation Loans & Financing Options in Colorado Springs

Eyeing a fixer in Colorado Springs or planning a kitchen overhaul in your current home? The right financing can turn a wishlist into a plan without draining your savings. You want clear options, realistic timelines, and a smooth path through permits and lender requirements. In this guide, you’ll learn the top renovation loans, how they work here in the Springs, and the steps to choose the best fit for your project. Let’s dive in.

Renovation loans at a glance

Renovation mortgages wrap purchase or refinance and construction costs into one loan. Funds are placed in an escrow account and released in stages as work is completed. Most programs require licensed contractors, detailed bids, and inspections. Your lender’s experience with renovation loans in Colorado Springs matters because local permitting and draw schedules can impact timing.

Compare the main loan programs

FHA 203(k)

FHA’s 203(k) combines your mortgage and renovation budget. As of November 4, 2024, the Limited 203(k) cap increased to 75,000, and completion windows now run up to 9 months for Limited and 12 months for Standard. Consultant fees for Limited can be financed, and HUD updated the fee schedule. See FHA’s program updates for details at the official FHA INFO page from HUD: FHA 203(k) updates and guidance.

• Best for: Primary residences, buyers with modest down payments, and projects that need a straightforward single-close structure.
• Key notes: Owner occupancy is required. Limited is for non-structural work, Standard covers major or structural items and requires a minimum 5,000 in repairs.

Fannie Mae HomeStyle Renovation

HomeStyle is a conventional option for purchase or refinance that can cover a wide range of permanent improvements. It works on primary residences, second homes, and some investment properties, subject to limits. Your loan size and eligibility often depend on the as-completed appraised value. Learn more on Fannie Mae’s consumer page: HomeStyle Renovation overview.

• Best for: Well-qualified borrowers who want flexibility, including higher-end finishes.
• Key notes: Timelines and delivery rules vary by lender, so confirm the completion window and draw process up front.

Freddie Mac CHOICERenovation

CHOICERenovation offers single-close purchase or refinance with funds drawn as work progresses. A streamlined CHOICEReno eXPress option exists for smaller projects. Most projects must be completed within about 12 months. See program details here: Freddie Mac CHOICERenovation.

• Best for: Conventional borrowers looking for flexible scopes and a clear draw process.
• Key notes: Lenders typically require a contingency reserve, and DIY work is tightly limited.

VA renovation options

Some VA-approved lenders offer renovation features that combine VA financing with repair funds. Availability, caps, and timelines vary by lender, and the home must be owner occupied by an eligible veteran or service member. Ask your lender specifically about VA renovation availability and limits for the Springs.

USDA Section 504 loans and grants

For very low-income homeowners in eligible rural areas near El Paso County, the USDA can provide repair loans up to 40,000 and grants up to 10,000. Combined assistance can reach 50,000. Explore eligibility for rural properties through USDA Section 504 Repair Loans and Grants.

State support through CHFA

The Colorado Housing and Finance Authority highlights renovation mortgage options and down payment assistance resources for Colorado buyers. Review state-level guidance at CHFA renovation mortgage programs.

Permits and contractor rules in Colorado Springs

Pikes Peak Regional Building Department

Most major projects in Colorado Springs require permits, plan review, and multiple inspections handled by the Pikes Peak Regional Building Department. Cosmetic-only work may not need permits. Homeowners can only pull permits for work on a primary residence they own and occupy. Start here for local rules and homeowner permit guidance: PPRBD permits and homeowner permits.

Licensed contractors and inspections

Renovation lenders usually require licensed contractors and proof of insurance. Inspections and draw approvals will be built into your loan. Plan review and inspection scheduling can add weeks to your timeline, so build that into your bid and completion calendar.

Other ways to finance your project

• Home equity line of credit: Flexible, interest-only during the draw period in many cases, but rates are often variable.
• Home equity loan: Fixed-rate lump sum with predictable payments.
• Cash-out refinance: Replaces your current mortgage, often good for larger budgets when rates and closing costs make sense.
• Personal loans or credit cards: Useful for small jobs, but usually higher rates than mortgage financing.
• Hard money or bridge loans: Typically for investors when speed or property condition blocks conventional financing.

Energy upgrades and cost offsets

Federal tax credits can reduce the net cost of heat pumps, windows, insulation, and more, subject to product and annual caps. Review eligibility and limits on the IRS page for the Energy Efficient Home Improvement Credit.

For commercial, industrial, and multifamily owners in Colorado, Colorado C-PACE can finance eligible energy or resiliency improvements with repayment through a property tax assessment. See statewide details at the Colorado Energy Office: Colorado C-PACE program. Single-family residential PACE is limited in Colorado today.

How the process works here

1. Get pre-approved with a lender that actively offers your target program and understands local permit timelines.
2. Choose a licensed contractor and finalize a detailed scope, line-item bids, and a permit-ready plan set.
3. Your lender orders an as-completed appraisal that sets the value framework for your loan size.
4. Close the loan, then renovation funds move into escrow with a draw schedule, contingency, and retention.
5. Work proceeds with inspections and draw releases until final sign-off and any final appraisal.

Quick Colorado Springs checklist

• Confirm your purchase contract gives enough time for bids, permits, and as-completed appraisal.
• Interview two or three lenders that regularly close 203(k), HomeStyle, or CHOICERenovation loans in the Springs.
• Verify each contractor’s license and insurance, and confirm who will pull required PPRBD permits.
• Build a contingency plan. A 10 to 20 percent cushion is common on top of the lender’s reserve.
• Track change orders carefully. Your lender will need documentation to approve budget shifts.

Common pitfalls to avoid

• Underestimating time for permits and inspections. PPRBD plan review and inspections can add weeks. Start early and factor the schedule into your contract.
• Picking a lender without renovation experience. Draw administration and as-completed appraisals have extra steps. Ask for sample timelines and recent local closings.
• Assuming you can DIY. Most programs tightly limit self-performed work. Get clarity before you count on sweat equity.
• Forgetting about taxes. Improvements may affect future assessed value. The El Paso County Assessor outlines the assessment calendar here: El Paso County Assessor calendar.

When a renovation loan makes sense

Use a renovation mortgage when you want one closing, structured draws, and a program built for construction with inspections and contingency. Consider equity or cash-out options when you have ample equity, prefer simpler documentation, or the project is small and fast. For rural properties that qualify, USDA Section 504 may offer targeted help.

If you want help weighing the tradeoffs for your home or a property you are buying, we are happy to talk through scope, timelines, and the lender path that fits your goals.

Ready to run numbers, compare programs, or connect with vetted local lenders and contractors? Reach out to Gary Kirkpatrick for a design-informed, step-by-step plan tailored to your project.

FAQs

What is an FHA 203(k) loan and who qualifies in Colorado Springs?

• FHA 203(k) combines a mortgage with renovation funds for an owner-occupied home, with updated caps and timelines published by HUD, and it is often a fit for buyers who need flexible credit and down payment options.

How do permits work in Colorado Springs for remodels?

• PPRBD handles permitting, plan review, and inspections for most major projects, and homeowners can only pull permits for a primary residence they own and occupy.

How long do renovation projects have to finish under common loans?

• Typical completion windows run about 9 to 12 months for FHA and Freddie Mac programs, with conventional timelines set by lenders, so confirm your exact window before you close.

Can I use a renovation loan on an investment property?

• Fannie Mae’s HomeStyle can be used on some investment properties subject to program limits, while FHA 203(k) is limited to owner-occupied homes.

Will renovations change my property taxes in El Paso County?

• Improvements can affect your home’s market value and may be reflected in the next reassessment cycle, which can change your tax bill according to the county’s assessment calendar.