What is Substantial Renovation?

Substantial Renovation Definition

As defined by HUD, substantial renovation is one of the following situations:

  1. Required replacements, repairs, and improvements that involve the replacement of two or more major building components

  2. Rehabilitation costs exceed the greater of:

    1. 15% (exclusive of soft costs) of the property's replacement cost/ fair market value after required repairs, replacements, and improvements

    2. $6,500 per dwelling unit (adjusted by HUD's authorized high-cost percentage)

    3. 20% of mortgage proceeds for rehabilitation expenses


To learn more about the HUD 223a7 refinance program, fill out the form below to speak to a HUD/FHA loan expert.