A HomeStyle renovation loan combines home purchase or refinance with home improvement financing in one loan with one closing. The HomeStyle renovation mortgage provides a convenient way for borrowers to make renovations, repairs, or improvements totaling up to 50 percent of the as-completed value of the property with a first mortgage, rather than a second mortgage, home equity line of credit, or other, more costly financing method. The funds can be used for any repairs or renovations that are permanently affixed and add value to the property. Eligible borrowers include individual home buyers, investors, nonprofit organizations, and local government agencies.
HomeStyle Renovation Loan Key Features
- The loan amount can match the total value of the home
- Qualify for loans based on the as-completed value of the property.
- The renovation funds do have a cap, at 50% of the total loan value.
- Available to owner-occupants, purchasers of second homes and investors
- Down payment of 5% for owner occupied 1-2 family homes; 20% for condominiums; and 20% for secondary homes.
- Loans can be for 15 or 30-year fixed terms.
- The loan can finance both hard and soft costs.
- Finance up to six months of mortgage payments to cover non-occupancy costs during construction.
- Borrowers can refinance an existing mortgage, and borrow funds for repairs in homes they already own.
- Lender involvement in construction oversight and monitoring provides added value to borrowers.
- Improvements may include landscaping, fences, and swimming pools.
Differences between HomeStyle and FHA 203k
The HomeStyle renovation program differs from the Federal Housing Administration’s 203K renovation program in that it has some stricter requirements, but also more flexibility. HomeStyle borrowers need a credit score above 680, but most 203K lenders require only a minimum score of 640, and some will go as low as 620. The 203K requires a lower down-payment, 3.5% compared to 5% for the HomeStyle renovation program. While the 203K only applies to owner occupied homes, the HomeStyle renovation program supports buyers who are investing in secondary properties. With the 203K, borrowers have to hire a consultant to inspect each step of the renovation process, but HomeStyle borrowers only need an initial and final inspection.
HomeStyle Renovation Loan Summary
Fannie Mae does not specify which improvements a borrower may or may not finance. This means that the improvement funds can be used for cosmetic purposes such as landscaping, swimming pools, appliances, and various kinds of remodeling. There is no minimum amount that needs to be spent on repairs. The improvements must be performed by contractors who are licensed, registered, or certified or have the highest level of certification required. For more information on the HomeStyle renovation loan, please contact Anthony DiLeo at (732) 264-2700 x 18, email at [email protected], or complete a Fast Quote request on our website.