Skip to content
tsmartcash

Refinance & construction

Renovate, build or refinance your US property.

Four common ways owners and investors fund renovations, additions and ground-up builds — and move from short-term to long-term financing. Funding options for eligible ITIN holders and foreign-national owners. Requirements vary by lender and program.

Discuss your project Estimate your numbers
Scenarios
Refinance, renovate, build, exit
Property
Residential, 1–4 units
Owner-occupied
Via a licensed partner

Four scenarios

Pick the path that matches your project

Each scenario has its own structure, paperwork and risks. These summaries are general education, not offers.

01

Cash-out refinance for a renovation, addition or ADU

Replace your current mortgage with a larger one and take the difference in cash to fund a remodel, an addition or an accessory dwelling unit (ADU). The new loan is based on today’s value, before the work.

How it works

  1. An appraisal sets the current value of the property.
  2. The new loan pays off the existing mortgage, up to the lender’s maximum loan-to-value.
  3. The remaining proceeds are paid to you at closing to fund the project.
  4. You repay the new loan over its full term.

Typical requirements (varies)

  • Enough equity after the new loan amount
  • Income or rent documentation for the program
  • Credit review; ITIN and foreign-national programs vary
  • Clear title and property insurance

Watch-outs

  • Your existing rate is replaced — compare total cost, not only the cash amount.
  • Proceeds are fixed at closing; budget overruns are on you.
  • ADUs must meet local zoning and permit rules.

02

Renovation refinance based on as-completed value

The loan is sized on what the property will be worth after the planned work. The renovation budget is held in escrow and paid out in draws as the work is completed.

How it works

  1. You submit a contractor bid and a detailed scope of work.
  2. An appraisal estimates the as-completed value.
  3. At closing, the existing loan is paid off and the renovation budget goes into escrow.
  4. Draws are released after inspections confirm each stage of work.

Typical requirements (varies)

  • Licensed contractor bid and scope of work
  • Permits where required
  • Contingency reserve, often a share of the budget
  • Income, asset and credit review per program

Watch-outs

  • Draws reimburse completed work; contractors may need upfront deposits.
  • Change orders may need lender approval.
  • If the appraisal comes in low, the loan amount shrinks.

03

Construction-to-permanent for land or ground-up builds

One financing plan covers the build and the long-term mortgage. You typically pay interest only on the amount drawn during construction; once the home is complete it converts into a permanent mortgage.

How it works

  1. The lender reviews the land, plans, builder and budget.
  2. Funds are drawn in stages as construction milestones are met.
  3. During the build you usually pay interest only on drawn funds.
  4. At completion, the loan converts or is modified into a permanent mortgage.

Typical requirements (varies)

  • Land ownership or purchase contract; land equity may count toward the down payment
  • Approved builder, plans, specifications and budget
  • Permits and builder’s risk insurance
  • Reserves for overruns and delays

Watch-outs

  • Delays increase interest-only costs and may require extensions.
  • Conversion terms can depend on conditions at completion.
  • Builder quality and financial strength matter to the lender — and to you.

04

Hard money exit: bridge, then DSCR or long-term refinance

Investors often buy or build with short-term hard money, then refinance into a DSCR or other long-term loan once the work is finished and the property is rented.

How it works

  1. Use a short-term bridge or hard money loan to purchase and renovate.
  2. Complete the work and place a tenant, or document market rent.
  3. A new appraisal sets the stabilized value.
  4. A DSCR or long-term loan pays off the bridge loan.

Typical requirements (varies)

  • Completed work and a certificate of occupancy where required
  • Lease or market rent analysis for DSCR qualification
  • Investment property held, often in a US entity
  • Reserves after closing; requirements vary

Watch-outs

  • Plan the exit before you close the bridge loan.
  • Some lenders require a seasoning period before using the new value.
  • Bridge extensions and prepayment terms can add cost.

How hard money loans work

Refinance & construction estimator

Choose a scenario and enter your own values and rate to estimate loan size, cash needed and payments.

Scenario

Property

$
$
$
$
$

Loan

%
%

Enter the rate a lender quoted you. We do not assume a market rate.

years
% of loan
pts

Carrying costs

$
$
$

Illustrative estimate only — not a rate quote, loan offer or commitment to lend.

Refinance & construction FAQ

What is the difference between a cash-out refinance and a renovation refinance?

A cash-out refinance is based on the current value and pays you cash at closing. A renovation refinance is based on the as-completed value and holds the budget in escrow, released in draws.

Can I build an ADU with a cash-out refinance?

Often, yes, if you have enough equity and the ADU meets local zoning and permit rules. Proceeds are fixed at closing, so plan for contingencies.

How do construction draws work?

The lender releases funds in stages after an inspection confirms completed work. You or your contractor may need to fund each stage before it is reimbursed.

What happens at the end of a construction-to-permanent loan?

When the build is complete, the loan converts into a permanent mortgage, typically moving from interest-only to principal-and-interest payments. Conversion terms depend on the lender.

How do I exit a hard money loan?

Common exits are selling the property or refinancing into a DSCR or other long-term loan after the work is done and the property is rented. Plan the exit before closing.

Can foreign nationals or ITIN holders use these options?

Some lenders offer programs for eligible foreign nationals and ITIN holders, especially for investment property. Requirements vary by lender and program.

Does tsmartcash quote rates or make the loan?

No. tsmartcash is not a lender. Owner-occupied refinances are handled by a licensed mortgage partner, and any rate or terms come from the lender.

Planning a renovation or build?

Tell us about the property, the project and your timeline. We will help you choose the right path and connect you with a lender or licensed partner.

Discuss your project Open the calculator

Equal Housing Opportunity. Owner-occupied mortgage loans are offered by licensed lending partners in accordance with federal and state fair lending laws.