Looking to purchase or refinance a home that needs some TLC, but don’t have enough in
savings to take on such a home rehab project? Home renovations, big or small, have never been
easier with a home renovation loan. Learn how a HomeStyle home renovation loan can turn a
house into the home of your dreams.
A HomeStyle home renovation loan is a one-time closed loan with a fixed mortgage rate that
allows the borrower to purchase a home that needs repairs, or refinance the mortgage on their
existing property. The loan provides funds to complete the necessary renovations and updates
all in a single loan. The HomeStyle renovation loan is a conventional loan that is backed by
Fannie Mae.
HomeStyle renovation loans can finance repairs on properties such as single family homes,
townhomes, PUDs, condos (must be HOA approved), and 2-4 unit multi-family homes. This loan
program also allows for financing of second homes that are only one unit and investment
properties that are only one unit. Cooperative units and non-warrantable condos are not
allowed to be financed with this loan program.
When it comes to making repairs and renovations to the property, the most important
requirement on a HomeStyle loan is that all repairs or improvements must be permanently
affixed to and add value to the entire property. Also, it is important to note that the total repair costs cannot exceed 50% of the after-improved value when the home is appraised after the
entire renovation project is complete.
A HUD consultant is utilized to oversee the general contractor and ensure that all mandatory
and requested repairs are made on a HomeStyle loan. The borrower is not allowed to provide
any self-help on the project, but it is acceptable for the borrower to be related to the general
contractor.
When working with a mortgage expert like Chris DePaepe on a HomeStyle renovation loan, she
will help guide you through the financing process to make sure that you are aware of all the ins
and outs of this loan program. Chris will inform you:
- Single family homes, townhomes, and condos allow for 5% down payment
- A higher down payment is required on 2-4 unit properties, investor and second homes
- Funds for down payment and closing costs may be gifted
- Up to six months of mortgage payments may be financed as a renovation loan cost if the
property is uninhabitable and the appraised value supports rolling these payments into
the loan - Minimum credit score to qualify is 620 FICO.
- Borrower must occupy the residence for a minimum of one year after completion.
- A non-occupant co-borrower’s income is allowed to help qualify for purchase
Finding the right home and loan program that fits your individual financing needs can be
challenging. Work with a trusted source like Chris DePaepe who will guide your renovation loan
from start to the closing table. For more information about home renovation loans and
qualifying requirements, contact Chris to discuss your personal goals and financing options.
