If you are looking for the perfect home and need financing for improvements or want to finance some home improvements on your current property then the HomeStyle renovation loan may a perfect match for you. It is a conventional loan so you do not have the limitations normal financing and your final loan (depending on area) may be as high at $625,000 for 1 unit properties.
Benefits and Features of using a Homestyle renovation loan:
- For Primary Residences (1-4 unit family properties), 2nd Homes (1-unit) and Investment properties (1-unit) including attached Single Family and attached/detached PUD’s
- 5% is the minimum down payment – However, if you only finance 80% you will have the option to avoid mortgage insurance and opt out of escrows. Another benefit of this being a conventional loan!
- Perfect for properties that may have been given very low marks on quality and condition ratings and unable to obtain financing with Conventional, VA, USDA or FHA loans.
- The contractor costs can be built into the loan.
- No need for a second mortgage to repair the property. All costs are built into the first mortgage, which means lower closing costs.
|HomeStyle Allowed Improvements for Primary Residence|
|... and many more, If it is permanently affixed and adds value it may be allowed. Contact us about your project.|
|Room Additions||Adding an Attached Garage|
|Addition of Luxury items such as Pools or Spas||repairing, reconstructing or elevating an existing foundation where the Structure will not be demolished|
|barbecue pits, outdoor fireplaces or hearths;||Foundation Repair|
|repairing or adding roofing, gutters and downspouts;||repairing/replacing plumbing, heating, AC and electrical systems|
|making site improvements that add value||Lead Paint & Asbestos removal|
|Installing or Repairing of Wells and/or Septic||Connecting to public water and sewage systems|
|Termite removal and repair||Mold Removal|
Financing Details when using the Homestyle renovation loan
- Purchases or refinances (Fixed Rate and Adjustable Rate) financing available as high as:
- For Principal residences
- 95% of Acquisition Cost + Rehab Cost (ACRC) up to Appraised Value on 1-unit
- 85% of ACRC up to Appraised Value (AV) for Fixed Rate on 2-units
- 75% of ACRC up to AV for Fixed Rate on 3-4 units
- For Second Homes 90% of ACRC up to AV for Fixed Rate on 1-unit
- HomeStyle Renovation for Investment Properties
- 85% of ACRC up to AV for Fixed Rate on 1-unit investment purchase loan
- 75% of AV for Fixed Rate on 1-unit investment property refinance
- For Principal residences
- Payment reserves determined on a case by case basis
Contractor Details/Requirements when using the Homestyle renovation loan
- Must have a construction contract with a contractor, no self-builds
- Use of a HUD Approved 203k Consultant is required
- The Bank reviews and approves your contractor to determine they are adequately qualified to perform the work and complete the job
- Plans & Specs must have been prepared by a registered, licensed, or certified general contractor, renovation consultant, or architect
- Plans & Specs must fully describe all work to be done & state when stages of completion will be scheduled, including both the job start & completion dates
Changes & Change Orders when using the Homestyle renovation loan
- Any changes to original Plans and Specs must be accompanied by a HomeStyle Change Order Request
Insurance Requirements when using the Homestyle renovation loan
- You will be required to obtain Hazard, Flood (where applicable) and Mortgage Insurance (if applicable) at the ACRC or Loan Amount (for refinances) at time of loan closing
Limitations when using the Homestyle renovation loan:
- Not eligible for manufactured housing or Condos
- Property Flipping Not Allowed
- If a refinance, you are not eligible to receive any cash back at closing
- Renovation costs are limited to 50% of the total loan amount. If you need more and it’s your personal residence then the FHA Full 203K rehab loan may be the mortgage for you.
- Renovation Costs may include(not all inclusive please call with the specifics of your project):
- Labor and materials
- Soft costs (architect fees, permits, licenses, inspection fees, independent consultant fees, engineering fees, fees charged for processing draws, fees for energy reports (HERS), review of renovation plans)
- Contingency reserve of 10% of the cost of labor, materials and soft costs) – this is optional unless property is a 2-4 unit property
- Contingency reserve may be financed or funded separately by the borrower
- Funds must be placed in an interest-bearing custodial account
- Contractor bid must be given to appraiser to determine ARV
- If using this loan for Energy Related Improvements, a HERS Energy report must be provided to us and appraiser
- When work is completed, the bank and you must sign the HomeStyle® Completion Certification
- If funds remain after all work is performed, they will be applied to the loan
- When you use a HomeStyle Renovation Mortgage for financing an investment property or second home, you are limited to a maximum of 4 financed properties
Availability of the homestyle renovation loan nationwide
Home improvement, renovation, and rehab Mortgage Loan State AvailabilityUS State availability for Home improvement, renovation, and rehab Mortgage Loans
So if you’ve been looking for that perfect home or need to fix up your home or investment property the HomeStyle Renovation loan may be the perfect way you can buy or fix up your dream home, 2nd home away from it all or a great investment cash flow property you would otherwise not be able to purchase or repair.
Contact us anytime and we would be delighted to consult with you and your project.
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