Cost of work needed is high - at least $5,000 - and borrower does not have the money available to pay for this work.  The more work needed, the more renovation lending makes sense.  If only minor work needs done it's often best to look at other options.

      Property is fairly priced for its current condition, market & location.  You do not want to over-pay for a property in less than good condition.  Typically you'd expect to get a bargain on this type of property as a reward for being willing to buy it ‘as is'.

    After renovation the property will appraise for the loan amount necessary.  You don't want to owe more than the property is worth.

     For additions, renovation loans makes sense if you can create a home that is better than the homes you're finding on the market.  For example, the house would be perfect if it just had a "_____".  (fill in the blank:  garage, family room, extra bedroom...)

   These loans are great for ‘fixer-uppers', handy-man specials or those homes that are advertised as "Needing a little TLC".