If you’re buying a fixer-upper or renovating an older home, the best renovation loan might be the FHA 203(k). The 203(k) rehab loan lets you finance (or refinance) the home and renovation costs into a single loan, so you avoid paying double closing costs and interest rates. If your home is newer or higher-value, the best renovation loan is often a cash-out refinance. This lets you tap the equity in your current home — and you could refinance into a lower mortgage rate at the same time.