Are you looking to buy a home that needs renovations or repairs? Or, maybe you want to refinance your current mortgage with needed home improvements included. The Fannie Mae HomeStyle® Renovation mortgage program may be the answer to your loan needs.
The HomeStyle Renovation loan combines the financing for a home purchase or a home refinance with home renovations into one mortgage – taking into account what your home is expected to be worth after home improvements are completed. You won’t have to get a second mortgage, an equity line of credit or a construction loan to get the work completed. So you don’t risk losing that fixer-upper you want or making do with the home you have, because you don’t have the money to make the needed renovations. Also you’ll only have to go to one closing – saving you time and money.
Some basic highlights of the HomeStyle Renovation program include:
- Primary and second homes as well as investment properties allowed. (Some limitations apply.)
- Single family home, condominiums, duplex, quad-plex and planned unit developments (PUD) allowed.
- 15- or 30-year conventional fixed-term loans offered.
- Renovations, repairs or improvements cannot exceed 50% of the “as-completed” appraised value of the property. Current Fannie Mae loan limits apply.
- The appraisal report must provide the as-completed appraised value, estimating the value of the property after renovations are completed.
- Renovations/repairs must be permanently affixed and add value to the property. For example, renovations/repairs can include additional square footage added, a new roof, heating and air conditioning, plumbing and/or electrical repairs, extensive landscaping, an outdoor kitchen, a spa and a swimming pool. Construction of out-buildings, such as a detached garage, pool house or barn, is not allowed.
- Completion of unfinished model homes or new construction may be eligible.
- The complete tear down of an existing home and construction of a new home is not permitted.
- Renovations must begin within 30 days of loan closing and be completed within 180 days.
- All renovation work must be completed by a licensed contractor. Ask your lender if “do-it-yourself” repairs are permitted.
- A 5% minimum down payment for primary, single-family residences is required. Ask your lender about down payment minimums for other types of properties.
- You can finance up to 6 months of mortgage payments for an owner-occupied property to cover any non-occupancy costs during construction, such as apartment rent.
- You must have a minimum credit score of 680, a good credit history and verifiable income.
- Occupancy and maximum LTV for a 1-unit primary residence is 95% and for a 1-unit second home is 90%. Ask your lender for LTV/CLTV information on other types of properties.
If you want to buy your first home and turn it into your dream home, or you just want to improve your current home, or you want to start investing in properties, without breaking the bank, a Fannie Mae HomeStyle Renovation mortgage may be the solution for you.
Contact Grandview Lending in Indianapolis at 866-690-4920 to see if you qualify for a HomeStyle Renovation loan. We’re approved by Fannie Mae to offer this loan option; and we’d love to help you have the home of your dreams or that great investment property.
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