Renovation Loans
Renovation loans enable home buyers or current homeowners to finance both a purchase or refinance, in addition to the renovation costs, into a single mortgage. Instead of applying for multiple loans, renovation loans allow homebuyers to purchase or refinance their property and renovate it with one convenient loan. By allowing the homeowner to finance the cost of improvements into the purchase or refinance of a home, renovation loans take the financial guesswork and frustration out of rehabilitating a home. Below are the various programs available in today’s market:
FHA 203(k) – Standard & Limited
- Owner-occupied properties only on FHA 203(k) programs
- 96.5% LTV for purchase transactions calculated by using the following formula: Acquisition Cost (Purchase Price) + Total Renovation Costs (determined by contractor bids that are confirmed as acceptable by HUD Consultant)
- 97.75% LTV for refinance transactions calculated by using the following formula: After Improved Value (determined with appraisal report and plans/specs provided from contractor bids that are confirmed as acceptable by HUD Consultant)
FNMA HomeStyle Renovation
- Allows for Owner Occupied (95% LTV), Second Home (90% LTV), and Investment Property (80% LTV) transactions
- Loan Amount based on the as-completed value of the home, rather than the present value. Renovation funds are limited to a max 50% of the as-completed appraised value
- Borrower may escrow up to 6 months PITI if home is uninhabitable during the renovation period
VA Renovation Loans
- Owner occupied transactions only, and borrower must be a Veteran
- 100% LTV based on lower of the 2 calculations: Original Contract Price plus Repair Cost or 100% of the After Repaired Appraised Value
- Minor remodeling and non-structural repairs only
- Total renovation costs cannot exceed $35,000
Contact Dave Kevelighan for Renovation Loan scenarios & pricing today!
