Essential Info About the FHA Rehab Loan - Version 1.0 Homeowners who need to repair an older house, or potential homebuyers looking to purchase and renovate a run-down home may want to look into applying for an FHA rehab loan. These loans are designed to make homes in urban and/or low-income areas more attractive and more livable, and are ideal for individuals on a limited budget. Because and FHA rehab loan is meant to facilitate sustainable development, it cannot be used to construct an entirely new home.