Can I Get a Mortgage on a Home That Needs Repairs, Is Damaged, Condemned, or Still Under Construction?
Usually not with a standard loan until the problem is fixed. A home with serious damage, a condemnation or unfinished construction generally can't close on a regular purchase or refinance loan until repairs are done, the condemnation is resolved or the build is complete. The usual paths are a renovation loan, like FHA's 203(k), which pays for repairs as part of the mortgage, or a construction loan while the home is being built.
Last updated September 29, 2026What if the home needs repairs like roofing, plumbing or structural work?
An FHA 203(k) loan is built for this. It finances the purchase or refinance together with repairs like roofing, plumbing, electrical and structural work, in one loan. FHA's usual credit floors apply: 500 with 10% down, or 580 with 3.5% down, though lenders often set a higher minimum.
If an appraisal calls for repairs, like a plumbing or structural issue, those generally have to be finished before the loan can close, especially on an FHA loan.
What if the home was damaged or failed an earlier appraisal?
You have a right to a copy of any appraisal done for your loan. Under federal rules, the lender has to give it to you promptly, and no later than three business days before closing.
If the home was appraised for a VA loan, that notice of value is good for six months, and within that time it can sometimes transfer to a new lender. After it expires, VA's process is a new appraisal under a new case number.
What if the home is still under construction or has a zoning issue?
A home that's mid-construction generally can't close on a standard mortgage or refinance, because the appraisal has to confirm it's finished. If the build hasn't gotten far, a construction loan is usually the realistic option.
Zoning can matter too. If the home's use doesn't match its zoning, like extra units on a lot zoned for one home, that can cause appraisal or eligibility problems, so raise it with your lender early.
It depends on your situation:
- Repairs needed: a 203(k) or other renovation loan can combine the purchase or refinance with the repair costs.
- An earlier VA appraisal has expired: expect a new one under a new case number.
- The home is still being built: a standard loan usually waits for completion; a construction loan may fit until then.
- Zoning doesn't match the home's use: flag it early.
- Borrowing against equity: a HELOC or home equity loan may use an automated value instead of a full appraisal.
| FHA 203(k) | Finances purchase or refinance plus repairs; FHA credit floors of 500 or 580 |
|---|---|
| Repairs called for by the appraisal | Usually finished before closing |
| Your appraisal copy | Yours by right, at least three business days before closing |
| VA notice of value | Valid for six months |
| Home under construction | Standard loans generally wait for completion |
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Sources
- http://www.hud.gov/hud-partners/single-family-mortgage-programs-203k
- http://www.hud.gov/hud-partners/single-family-203k
- https://www.hud.gov/sites/dfiles/SFH/documents/MO_FS_203(k)_Consumer.pdf
- https://www.fha.com/fha_article?id=4142
- https://www.thecreditpeople.com/loans/what-are-fha-203k-rehab-loan-requirements
- https://www.nar.realtor/news/real-estate-news/hud-opens-review-of-minimum-property-requirements-for-fha-mortgages
- https://www.benefits.va.gov/HOMELOANS/documents/circulars/26_14_28.pdf
- https://www.americanherohomeloans.com/va-appraisal-faq
- https://files.consumerfinance.gov/f/documents/201401_cfpb_compliance-guide_ecoa_juftx4F.pdf
- https://www.consumerfinancemonitor.com/2020/05/08/new-cfpb-factsheets-addressing-ecoa-valuations-rule-are-likely-to-create-confusion-regarding-coverage
- https://lowvarates.com/va-loan-blog/va-loans-transfer-of-appraisers-reports-between-lenders
- https://www.flcbmtg.com/wp-content/uploads/2022/01/VA-Case-Number-Transfer-Process.pdf
- https://selling-guide.fanniemae.com/sel/b5-3.1-01/conversion-construction-permanent-financing-overview
- https://selling-guide.fanniemae.com/sel/b5-3.1-02/conversion-construction-permanent-financing-single-closing-transactions
- https://www.nationalmi.com/wp-content/uploads/2025/12/CTPReferenceGuide_F_26.01.01_HQ.pdf
- https://selling-guide.fanniemae.com/sel/b4-1.3-04/site-section-appraisal-report
- https://www.fhfaoig.gov/Content/Files/WPR-2018-006.pdf
- https://visitcss.com/resources/blog/the-four-home-equity-valuation-tools-and-when-to-use-them
- https://singlefamily.fanniemae.com/property-valuation/faqs-property-valuation
- https://selling-guide.fanniemae.com/sel/b4-1.4-10/value-acceptance
Sourced from licensed loan officers and brokers in the FreeRateUpdate network.
Educational information only, not individualized financial or legal advice. Program details and rates change; verify current terms with a licensed loan officer before making a decision.