Most buyers walk away from a house that needs work because they assume they have to pay for the renovation twice, once at closing and again out of pocket before they can live in it. Most sellers list a dated house as-is because they don’t have $50,000 sitting around to update a kitchen first.
Both assumptions are wrong, and in both cases the fix is a financing product that most people in DFW have never had explained to them.
I sat down with mortgage broker Bill Jacobs of Lendid Home Loans at Joe T. Garcia’s in Fort Worth to walk through the two of them side by side: a renovation loan on the buy side, and Compass Concierge on the sell side. Here’s what came out of that conversation.
There are two ways to pay for a renovation without writing a check up front. If you’re buying, a renovation loan folds the cost of the work into your mortgage and underwrites the loan against the home’s value after renovation, with as little as 3% down for first-time buyers. If you’re selling, Compass Concierge fronts the cost of pre-listing improvements and you repay it at closing out of the sale proceeds.
They solve the same problem at opposite ends of the transaction. Which one applies to you depends entirely on whether you’re the one moving in or the one moving out.
Renovation loan vs. Compass Concierge, side by side
| Decision | Renovation loan | Compass Concierge |
|---|---|---|
| Who it’s for | Buyers purchasing a home that needs work | Sellers preparing a home to list |
| Money comes from | A wholesale mortgage lender, financed into the loan | A third-party lender through the Compass program |
| Out of pocket up front | Down payment only: 3% first-time, 5% repeat, 0% VA | Nothing |
| When you repay | Monthly, as part of the mortgage | In full at closing, from sale proceeds |
| Underwritten against | The after-renovation appraised value | A soft credit pull and the listing agreement |
| Main requirement | Renovation plans underwritten before closing | Listing the home with a Compass agent |
| Biggest tradeoff | Longer timeline to close | You must sell to repay it |
How a renovation loan actually works
The mechanic that makes a renovation loan different from a normal mortgage is what the lender appraises. A conventional loan is underwritten against what the house is worth today. A renovation loan is underwritten against what the house will be worth once the planned work is finished, the after-renovation value, or ARV.
That single difference is what creates the budget.
You find a house you can buy for $500,000. It’s structurally fine but dated: original kitchen, tired flooring, a roof at the end of its life.
Your agent assesses the house in its current condition and projects what it will appraise for with a specific scope of work completed. Say that number is $650,000.
That $150,000 gap is your renovation budget, kitchen, roof, flooring, landscaping, and it’s financed into the loan rather than paid out of pocket.
“The financing is very similar to a normal purchase transaction,” Bill told me. “The only difference is you need a little bit longer time to plan, and you have to get your renovation plans underwritten. Your total loan is based on the appraised value after those renovations.”
That “longer time to plan” is the real cost of this product, and it’s worth being honest about. You can’t decide to use a renovation loan two weeks before closing. The scope of work has to be defined, priced by actual subcontractors, and submitted for underwriting. That’s a front-loaded process, and it’s the reason most buyers who could use one never do. They find out about it too late.
You do not need 20% down
This is the misconception that kills more renovation-loan conversations than anything else. Buyers assume that because the loan is larger and more complex, the down payment must be bigger too. It isn’t.
Twenty percent has never been the requirement for most buyers. It’s a number that persists because it used to be the threshold for avoiding mortgage insurance, and the two ideas got welded together in the public imagination. If you’re early in the buying process, the more useful move is to get a real pre-approval and find out what you can actually do.
Why work with a broker rather than a single lender
Bill is a broker, not a retail loan officer, and that distinction matters more on a renovation loan than on a plain vanilla purchase. “We have a lot of different wholesale lenders that we can work with,” he explained. “We can shop the lender with the best rate to offer to the customer based on their situation.”
A bank has one set of products. A broker has many. On a straightforward 30-year fixed purchase, that difference might be a few basis points. On a renovation loan, where the underwriting is unusual and lender appetite varies a lot, it can be the difference between getting the loan and not.
How Compass Concierge works on the sell side
Concierge answers the mirror-image problem. You own a house that would sell for meaningfully more with an updated kitchen and a new roof, but spending $60,000 to make $100,000 requires having the $60,000 first, and most sellers who are moving don’t want their cash tied up in a house they’re leaving.
Compass fronts it. You repay at closing, out of the proceeds.
- Agree the number first You and your agent settle on a figure before anything is submitted.
- Apply in about half a page A soft credit pull and a short online form. Approval typically comes back quickly.
- Pay subcontractors as the work happens What arrives is a debit card used to pay vendors directly as the scope is completed.
You only repay what you actually spend. If the approved amount is $50,000 and the finished scope of work costs $37,000, you repay $37,000 at closing and the balance reverts.
Which one applies to you
You’re buying
You’re purchasing a home that needs work, you have the lead time to get a scope priced and underwritten before closing, and you’d rather carry the cost in the mortgage than pay for it twice.
You’re selling
You’re selling within roughly the next year, your home is dated relative to the comps buyers are measuring it against, and you’d rather not carry the cost of improvements while you’re also funding a move.
The house is already there
Your home is already in strong condition. Not every house needs work before it lists. I’ve walked into homes where the honest answer was that there was nothing worth doing, and saying so is part of the job.
The part that isn’t about financing
Having access to the money is the easy half. Deciding where it goes is the half that determines whether you make anything.
I call myself a strategic remodeler as much as a real estate advisor, and the distinction is deliberate. We all want to live in a beautiful home. But if you’re renovating ahead of a sale, the question is never “what would I like?” It’s “what will a buyer pay more for?” Those are different questions with different answers, and confusing them is how sellers spend $50,000 to gain $30,000.
The order I work in, and the reasoning behind it:
- Physical plant first Foundation, roof, HVAC. These don’t add glamour, but an unresolved one caps your price and can kill a deal at the inspection.
- Kitchens and bathrooms next These move the number more than anything else. Neutral enough to draw everyone in, but still good-looking.
- Curb appeal last, and cheap Nine times out of ten this is paint on the front door, some landscaping, and lighting. It’s the first impression, and it costs a fraction of what people assume.
Get a pre-listing inspection. It runs a few hundred dollars and it’s the best money a seller spends. You do not want to learn what’s in the wall after you have a buyer under contract. You want to find it, fix it, and attach the report to the MLS listing, so a buyer walks in seeing three open items instead of fifteen and evidence that you handled the rest.
And back into the numbers before you spend, not after. If the comparable sale down the street with the renovated kitchen closed at $600,000, that tells you what your ceiling is. Work backward from there to what the work should cost, and if the answer is that a $50,000 kitchen only buys $30,000 of price, do the $20,000 version instead.
Frequently asked questions
Can I finance renovations into a mortgage in Texas?
Yes. Renovation loans let you finance the cost of improvements into the purchase mortgage, with the loan underwritten against the home’s appraised value after the work is complete rather than its current condition. Down payment requirements are comparable to a standard purchase, roughly 3% for first-time buyers and 5% for repeat buyers, with 0% down available on VA loans. The main practical difference is timeline: renovation plans must be underwritten before closing, so the process needs more lead time than a conventional purchase.
How much can I borrow with a renovation loan?
The budget is generally driven by the after-renovation value (ARV), what the home is projected to appraise for once the planned scope of work is finished. If you’re purchasing at $500,000 and the projected post-renovation value is $650,000, that $150,000 difference frames the renovation budget. Specific loan-to-value limits vary by lender and program, which is one reason working with a broker who can shop multiple wholesale lenders is useful on this product.
What is the Compass Concierge limit?
The Compass Concierge cap was raised from $25,000 to $75,000, and eligibility was expanded to include LLCs, which allows it to be used on investment properties rather than only a primary residence. Program terms change, so confirm current limits with your Compass agent before planning a scope of work.
Do you pay Compass Concierge back if the house doesn’t sell?
Concierge is repaid at closing out of the sale proceeds, which is why the program requires that the home be listed with a Compass agent. You repay only what was actually spent. If $50,000 is approved and $37,000 is used, $37,000 is repaid. Because repayment is tied to the sale, sellers should treat the funds as a cost against their net proceeds and spend only where the improvement returns more than it costs.
Is a renovation loan or Compass Concierge better?
They aren’t competitors. They apply to opposite sides of a transaction. A renovation loan is for a buyer purchasing a home that needs work, repaid monthly as part of the mortgage. Compass Concierge is for a seller improving a home before listing, repaid in a lump sum at closing. A homeowner selling one house and buying another could reasonably use both, in sequence.
Do I need 20% down to buy a house in Texas?
No. First-time buyers can often purchase with 3% down and repeat buyers with 5%. Qualifying veterans can use a VA loan with no down payment. The 20% figure is widely believed because it’s the traditional threshold for avoiding private mortgage insurance, not because it’s a minimum to buy. A pre-approval from a lender is the fastest way to find out what your actual number is.
Talk through your situation
If you’re looking at a house that needs work and trying to figure out whether the numbers make sense, or you’re planning to sell in the next year and want to know what’s worth doing first, that’s the conversation to have early, before you’ve spent anything.
I work across Dallas and Fort Worth, and I’m happy to make the introduction to Bill Jacobs at Lendid Home Loans on the lending side. More about how I work with clients here.
Find out which one applies before you spend anything
Whether you’re buying a house that needs work or selling one that’s dated, the numbers are worth running early.
Book a call with TravisBased on a conversation between Travis-Lee Moore, REALTOR® with the Cliffside Collective at Compass, and mortgage broker Bill Jacobs of Lendid Home Loans, recorded at Joe T. Garcia’s in Fort Worth, August 2026. Loan programs, rates, and program caps change. Confirm current terms with a licensed lender before making decisions. This is general information, not lending or legal advice.
Travis-Lee Moore · Cliffside Collective · Compass
