For this episode, we sat down with Vanessa Rez, a mortgage lending specialist with 25+ years of experience specializing in renovation and construction lending. Vanessa works with Mann Mortgage and describes herself as the "203k queen" after closing hundreds of renovation loans in the Portland metro area since 2002.
This 68-minute video podcast interview covers current loan products, rates, requirements, and common scenarios Portland homeowners face when financing remodels.
Lamont Bros. Design & Construction has been a Portland-based design-build firm since 2008, completing hundreds of remodeled homes and working extensively with renovation loan specialists to help clients finance projects ranging from $50,000 kitchen remodels to $500,000+ whole-home renovations.
For homeowners planning a major kitchen remodel, home addition, ADU, or ground-up build, the breakdown below expands on the most important financial takeaways from the interview so you can make informed, confident decisions about funding your project.
Renovation loans let you borrow against your home's after-improved value (what it will be worth after remodeling), allowing you to finance 95% of the total project cost with just 5% down. Interest rates run approximately 0.25% higher than standard mortgages for conforming loans (under $840,000 as of 2026).
Why this matters: With a renovation loan, you can purchase a fixer-upper for $400,000, add $200,000 in improvements, and finance the entire $600,000 with one loan—enabling you to buy and remodel before moving in, rather than living in construction for years.
If you have a low mortgage rate (under 4%)
Use a home equity loan instead to preserve your existing rate. You can borrow up to 80% of current home value at fixed rates, though you'll pay 1-2% more since it's a second lien position.
For buyers with recent credit challenges
FHA 203k loans accept credit scores as low as 600 and offer rates approximately 0.5% lower than conventional mortgages. Projects under $75,000 and non-structural qualify for streamline processing without a HUD consultant.
Portland-specific insight
Don't wait for dry weather—experienced contractors have methods for year-round remodeling in Oregon's rainy climate. Delaying your project costs more due to consistent year-over-year construction cost inflation.
Yes—this is one of the most common uses. You can purchase a home that needs work and finance the renovations in a single loan. The loan is based on the after-improved value, so you don't need to have all the renovation cash saved upfront.
All renovation loans include an automatic 10% contingency. If your $200,000 project needs an extra $15,000 due to unexpected issues, you can use the $20,000 contingency. If nothing goes wrong, you can use contingency funds for change orders or upgrades you decide on during construction.
FHA 203k loans technically allow this, but it's strongly discouraged. Each subcontractor (electrician, plumber, roofer, etc.) must complete bank registration paperwork. Most subcontractors refuse to fill out extensive paperwork for small scopes of work. Using one licensed general contractor is easier, not necessarily more expensive, and prevents administrative nightmares.
No. Plans are only required if you're changing square footage or changing room count. Kitchen and bathroom remodels that keep the same footprint typically don't require architectural plans—just a detailed scope of work and contractor bid.
You can typically borrow up to 90% of the after-improved value (what your home will be worth after renovations are complete). This means you need 10% down on the total project cost for conventional loans, or as little as 3.5% down for FHA 203k loans.
If the appraiser determines the after-improved value is lower than expected, you may need to:
Yes. Adding an ADU (Accessory Dwelling Unit) is a common use of renovation loans in Portland. ADUs add significant value to your property, which increases the after-improved value and supports the loan amount.
The contractor completes work, then requests a draw (payment) from the lender. The lender sends an inspector to verify the work was completed as described. Once verified, funds are released to the contractor. This typically happens monthly or at major milestones throughout the project.
For construction loans (ground-up builds), you have a rate cap that protects you from increases, plus a free float-down feature if rates improve. For renovation loans on existing homes, your rate is locked at closing and doesn't change.