What term refers to a loan designed to cover the costs of buying and renovating a property?

The correct answer is a loan designed to cover the costs of buying and renovating a property is referred to as a Construction Loan. Construction loans are specifically structured to finance the purchase of a property and also cover the costs associated with building or renovating it. These loans typically have unique disbursement schedules that release funds at various stages of construction, which allows the borrower to pay contractors and suppliers as needed.

While home improvement loans focus solely on renovations rather than purchasing a property, and renovation loans can sometimes refer to similar products, construction loans encompass both buying and renovation aspects, making them the most suitable term for this scenario. Refinance loans, on the other hand, are designed to replace an existing mortgage with a new one, making them irrelevant in the context of purchasing and renovating a property.