I’m Michael DiVita — DRE #01372066 | NMLS #241655, DiVita Home Finance (DRE #01818285 | NMLS #323700), Tiburon, CA. I’ve been in California mortgage lending since 2000 and founded DiVita Home Finance in 2007. Call (800) 239-1103.
Most renovation financing is constrained by what your home is worth today. The renovation HELOC is different — it lets you borrow based on what your home will be worth after the project is complete. This is a game-changer for California homeowners planning major renovations or ADU construction, where the after-renovation value (ARV) can significantly exceed the current as-is value. See also: HELOC California — all programs and ADU financing California.
How a Renovation HELOC Works
A standard HELOC is limited by your current home value. If your home is worth $800,000 today, a 90% CLTV HELOC with a $500,000 first mortgage gives you a $220,000 line. A Renovation HELOC uses the ARV — the home’s projected value after the planned improvements. If that same home will be worth $1,050,000 after a full renovation and ADU addition: at 95% of ARV ($997,500 total available) minus first mortgage ($500,000) = $497,500 Renovation HELOC available. That’s more than double the access compared to a standard HELOC — without any cash-out refinance, no PMI, and your existing first mortgage completely untouched.
Renovation HELOC Program Features
- Borrow up to 95% of ARV (after-renovation value)
- OR up to 125% CLTV of current as-is value — whichever is less
- No mortgage refinance required
- No PMI
- 10-year draw period — draw funds as the renovation progresses
- Interest-only payments during draw period
- Standard HELOC repayment after draw period ends
What Projects Make Sense for a Renovation HELOC?
In California’s high-cost markets, the ARV uplift from major projects can be substantial. ADU construction: a detached ADU in Marin or San Francisco can add $400,000–$600,000 to ARV. Full kitchen and bath renovation: can add 10–20% to home value in premium markets. Room additions: adding a bedroom and bath to a 3-bed/1-bath home. Whole-home remodel: cosmetic plus structural improvements on dated properties. Energy efficiency upgrades: solar, HVAC, windows — increasingly valued in California.
Renovation HELOC vs. Construction Loan
| Feature | Renovation HELOC | Construction Loan |
|---|---|---|
| Based on | ARV of renovated property | Planned construction value |
| First mortgage impact | None — second lien | Often requires refinancing first |
| Draw flexibility | Revolving — draw as needed | Fixed schedule disbursements |
| Complexity | Lower — HELOC underwriting | Higher — full construction review |
| Best for | Renovations and ADUs on existing homes | Ground-up construction |
ARV Appraisal — How It Works
To establish the after-renovation value, lenders require a “subject-to” appraisal — an appraisal that estimates the home’s value assuming the planned renovation is complete. You’ll need to provide detailed plans and a cost estimate from a licensed contractor. The appraiser reviews comparable home sales in your neighborhood that already have the features you’re adding and estimates what your home would sell for once the work is done.
Is a Renovation HELOC Right for Your Project?
A Renovation HELOC is the right tool when you need more funds than a standard HELOC can provide; you want to avoid refinancing your existing first mortgage; your project will meaningfully increase your home’s value; you want flexible draw access as the project progresses; and you’re in a California market where renovation ROI is high.
- HELOC California — All Programs Including Renovation
- HELOAN California — Fixed-Rate Up to $1M
- Why Not Do a Cash-Out Refi Instead?
- ADU Financing California
Frequently Asked Questions
How much can I borrow with a Renovation HELOC in California?
Up to 95% of your home’s after-renovation value (ARV), or 125% of your current as-is value, whichever is less. In practice, this means: if your $800,000 home will be worth $1,050,000 after a full renovation and ADU addition, 95% of ARV = $997,500 total available. Subtract your existing $500,000 first mortgage = $497,500 Renovation HELOC available. Compare that to a standard HELOC at 90% of current value: 90% × $800,000 − $500,000 = $220,000 available. The renovation HELOC provides more than double the borrowing capacity — without touching your first mortgage or requiring PMI.
Do I need contractor bids to get a Renovation HELOC?
Yes. The “subject-to” appraisal that establishes your ARV requires detailed renovation plans and a licensed contractor’s cost estimate as inputs. The appraiser uses those plans — along with comparable sales of homes in your neighborhood that already have the features you’re adding — to estimate what your completed home would sell for. Without contractor bids and plans, the appraiser can’t complete the ARV appraisal. You don’t need a signed contract with a contractor, but you do need detailed enough plans and cost estimates to support the appraisal process. I can guide you through exactly what the appraiser will need based on your specific project type.
Is a Renovation HELOC better than a cash-out refinance for funding a California ADU?
For the majority of California homeowners with sub-4% first mortgages, a Renovation HELOC is dramatically better than a cash-out refinance for ADU funding. A cash-out refinance pays off your entire first mortgage and replaces it at today’s rates — costing you potentially $15,000–$25,000 extra in annual interest permanently. A Renovation HELOC adds only a second loan at the higher rate, leaving your existing first mortgage untouched. Additionally, the Renovation HELOC’s ARV-based qualification often provides more accessible funding than a standard cash-out refi, since it accounts for the ADU’s contribution to home value before the project is complete. The revolving draw structure also matches ADU construction’s phased disbursement needs better than a lump-sum refi payout.
Talk to Michael Directly
DiVita Home Finance | Tiburon, CA | In lending since 2000, founded DiVita Home Finance in 2007. Michael DiVita DRE #01372066 | NMLS #241655. Company DRE #01818285 | NMLS #323700.
💬 Text: (310) 849-9124
