RenoFi, a startup that partners with credit unions to help homeowners finance home renovation projects, announced Monday that it’s landed $14 million in Series A funding.
Since launching in 2020, Philadelphia-based RenoFi says it’s tripled its headcount to more than 60 people, and is now partnered with more than a dozen lenders offering second mortgages and home equity lines of credit (HELOCs) in 49 states.
RenoFi claims to have created the first end-to-end loan origination and underwriting platform for renovation lending, allowing homeowners to borrow up to 90 percent of their home’s future value — after remodeling is complete.
With partner lenders offering renovation loans of up to $500,000, RenoFi says it’s generated more than $10 billion in renovation financing demand from lenders offering loans through RenoFi’s platform.
“We decided from the outset that the best way to actually help homeowners was to build the rails that America’s great lending institutions needed to bring this new product category online,” RenoFi co-founder and CEO Justin Goldman said in a statement. “With the reception we’re getting from lenders, it’s clear we made the right choice.”
The Series A funding round was led by Canaan, which also led RenoFi’s June 2020 seed round, with additional participation from new investors Nyca Partners and CMFG Ventures. RenoFi said it will use the new funding to “scale its business operations and product roadmap, including its first-of-its-kind renovation enablement platform for lenders.”
Canaan General Partner Brendan Dickinson said the $400 billion home renovation lending market has been “underserved to date,” and that RenoFi’s progress since its last round “has been incredibly strong and speaks to the big future ahead.”
According to the company’s website, RenoFi currently works exclusively with credit unions that provide several different types of RenoFi loans, including fixed-rate home equity loans with 10, 15 or 20 years that don’t require refinancing.
Homeowners working with RenoFi must provide renovation plans and a detailed cost estimate from their contractor, which maximizes their borrowing power by enabling an appraiser to determine what their home will be worth after the work is completed.
Lenders pay RenoFi to perform underwriting services that include a review of the renovation project cost and scope, due diligence on the contractor, reconciliation of the appraisal and monitoring of renovations in progress.
Although RenoFi’s services are free to homeowners, they can expect to pay around $495 in fees to lenders plus the cost of the appraisal, which is typically under $500, the company says.
Last year, iBuying giant Opendoor acquired two home renovation startups, Skylight and Pro.com, which it planned to integrate into its own operations.
A number of real estate brokerages offer renovation and project management service for listing clients, including One Sotheby’s International Realty, Compass, Keller Offers and Red Oak Realty. Software provider Revive helps agents, sellers and contractors determine a budget and manage small presale home renovation projects.