.png)
HomeStyle Renovation Loans
A renovation loan is a powerful tool for homebuyers looking to purchase a property that needs a little TLC. With this type of mortgage, you can finance both the purchase price and the cost of repairs or upgrades into a single loan.
You can be Pre Approved by the end of the day!
Conventional Financing
Purchase or Refinance
30 Year Fixed terms
Finance your renovations
Popular HomeStyle Renovation Loan Topics
For buyers looking at homes that need work—or current homeowners dreaming of a remodel—the Fannie Mae HomeStyle® Renovation Loan offers a powerful, all-in-one financing option. Instead of taking out a separate loan or draining your savings, this program lets you roll the renovation costs into a single mortgage.
Mortgage Rates for HomeStyle Renovation Loans
Your mortgage rate is an important factor in your overall home payment and family budget. Our company is built to offer lower mortgage rates which will help make your home more affordable.
On average, our mortgage rates are .326% lower than the national average. This equates to $23,836 in life of loan interest savings. See details on rate savings calculation here.
Program Highlights
Fixed Rates
No upfront mortgage insurance
Primary Residence, Second Homes and Investment Properties
620 minimum credit score
Down payments as low as 3%
Frequently Asked Questions
You can use conventional financing to buy a property and finance the renovation. Your minimum down payment of 3-5% is based on the lower of the total cost of the project (including the purchase price and the cost of your renovations) or as completed appraised value.
How does a renovation loan work?
Any type of renovation or repair is eligible, as long as it is permanently affixed to the property. However, we do not allow for tear downs and rebuilds.
What type of renovations can I do with this loan?
No, we do not allow for do it yourself renovations. The renovation must be done by an approved, licensed contractor.
Can I do the work myself?
A renovation loan takes a bit longer than a normal loan. We usually recommend a 45-60 day contract period to allow for the extra steps involved in the renovation bids and contractor approval.
How long does it take to close a renovation loan?
HomeStyle Renovation Loans
Overview
If you find a property where many of the property characteristics are ideal (area/neighborhood, school system, lot characteristics), but the home needs renovations, our renovation loan will give you the ability to purchase the home and finance your improvements.
Let’s assume a property is listed for $250,000 and you would like to remodel the kitchen and two bathrooms. You engage a licensed contractor to obtain a bid for the renovation, we’ll assume the cost of this renovation is $50,000.
You would write a contract to purchase the home for $250,000. The contract, along with the contractor's bid, and required contractor docmentation, is submitted to the lender.
During the loan process, an appraisal is ordered with a request for an "as-completed" value. The apprasier receives a copy of the purchase contract, as well as the contractor's bid for the work to be performed.
Let’s assume the appraisal returns an “as-completed value” of $300,000. In other words, the appraiser is saying that the property value will be $300,000 upon completion of the proposed renovations.
Your financing can now be based off of $300,000, allowing your renovations to be financed, rather than being paid out of pocket. Your required down payment is based off of this as completed value. The loan closes after going through a standard underwriting process. The renovation work can commence after closing.
The renovation funds are set aside into a separate account that the contractor can draw from to purchase materials and have the work completed. Upon the verified completion of the renovation, the appraiser will re-visit the property and provide a final inspection certifying completion. At this time, the renovation account is closed, and any unused funds will be applied towards your existing loan.
From here, you have an improved home and a regular conventional mortgage.
What is the minimum credit score for a HomeStyle Renovation loan?
You will need a credit score of 620 or higher, just like other Conventional loans.
How much can I borrow with a HomeStyle Renovation loan?
Renovation loans follow Conventional guidelines as far as loan limits. In terms of your maximum loan to value, you can borrow up to 95% (97% if you are a first-time home buyer) of the lower of the total cost of the project (including the purchase price and the cost of your renovations) or as completed appraised value.
What type of renovations are allowed?
Any type of of renovation or repair is eligible, as long as it is permanently affixed to the property. There are no required improvements or restrictions on the types of renovations allowed, nor is there a minimum dollar amount for the renovations. Generally, the improvements should be permanently affixed to the real property (either dwelling or land), with the exception of certain appliances installed with kitchen and utility room remodels.
What documentation do I need to provide for a HomeStyle Renovation loan?
You will need to fully document your income and assets. Standard documentation requirements include recent paystubs, last two years of W2s, and the last two years of tax returns, if self-employed. You will also need to document all liquid assets used for down payment and closing costs. In addition to these standard items, you will also submit an itemized contractor's bid for all of the materials and labor associated with the renovation.
What is involved with the contractor approval?
Contractors must submit the following documentation to become an approved contractor. 1) Contractor questionnaire, 2) copy of contractor's license, 3) general liability insurance, 4) evidence of workman's compensation policy, and 5) W-9 form.
What happens at closing?
The loan closes much like a normal transaction, with a few exceptions. On the day of closing, you will sign your loan documents and wire in your funds for down payment and closing costs. The amount due to the seller for the purchase of the home will be disbursed. The funds allocated for the renovation will be held in a separate account until the work is complete.
How are payments to the contractor made?
Based on the project, a certain percentage of the renovation funds may be disbursed at closing for the purchase of materials. During the renovation process, the contractor will receive disbursements as work is completed. These disbursements are based on a draw schedule that is set up prior to closing.
When do I start making payments on the loan?
Your first payment on the loan is due on the first of the following month after closing. For example, if you close August 15, your first payment would be due October 1. These are fixed rate loans that have fixed principal and interest payments so your payments will be the same, regardless of how much of the work has been completed.
-min_edited.jpg)