The HomeStyle Renovation Loan program is designed to give borrowers the option to purchase a home and make improvements and renovations to the property, all while having one single loan.
This program provides simple, flexible, and affordable financing for not only the purchase of a house, but also the completion of a variety of projects ranging from cosmetic improvements to necessary structural repairs.
Available thanks to Fannie Mae, this program, which was updated in 2018, gives homebuyers more options when shopping. Some homes may be overlooked because they need significant repairs or renovations, and buyers don’t want to take out a second loan or use high-interest renovation-loan options to fund the improvements. By using a HomeStyle loan, they not only get the money they need for a purchase, they also get the money needed to bring the home to their high standards.
If you have a credit score of 620 or higher, you can work with San Diego Purchase Loans to take advantage of this excellent program.
HomeStyle Renovations Loans from San Diego Purchase Loans
Allows for as Much as $726,525 in Loan Total
With a HomeStyle Renovation Loan, you can get financing for over $726,000 in a total loan. This is the maximum limit set by the Federal Housing Finance Agency, which established a commonly-used cap for home loans, especially those purchased by Fannie Mae and Freddie Mac. This limit, however, is only for counties deemed “high cost” areas, which is based on many factors. If you live in a high-cost area, you can actually use a HomeStyle Renovation Loan to make a purchase of $764,763 if you have a 5% down payment.
The base limit across the country is $484,350, which means no matter where you live you can, at the very least, make a purchase of $499,329 with a 5% down payment. To see the conforming limit in your area, you can visit the Conforming Loan Limit Map from the FHFA.
Available for Second-Home and Single-Unit Investment Properties
You may assume that this loan option is only for single-family homes, but this is not actually the case, as you can use the loans to purchase and renovate a second home or a single-unit investment property.
Under Specific Circumstances, Can be Used for Up to 4-Unit Properties
In addition to second homes and investment properties, there are certain situations when a borrower can also use the program for a property that has up to four units. The most noticeable requirement here is that you have to occupy one of the units for a certain period. Also, you will have to bring a 25% down payment, which may eliminate many potential borrowers.
No Need for High-Interest-Rate Loans
Perhaps the most attractive aspect of these renovation loans, when you use HomeStyle Renovation Loans you will avoid other programs that often come with higher interest rates. For example, you will not have to use a Home Equity Line of Credit or a credit card, both of which will, in most cases, have higher interest rates than the HomeStyle program.
Excellent Strategy for Resort-Area Purchase
If you are looking to purchase and renovate a property in a resort area, this program may be ideal. You can use the loan to purchase a second home in a vacation destination and make renovations and upgrades to the property. You can then use the property as a short-term rental to make money on the property and take advantage of the highest short-term rents.
Fixed and Adjustable-Rates Available
This program also gives you options for the structure of the loan itself. Using the program, you can do a 30-year fixed-rate loan, which brings steady, consistent payments throughout the life of the loan. You can also have a 5/1 adjustable-rate mortgage or a 7/1 adjustable-rate mortgage, which often brings lower initial payments as well as the potential to save if interest rates drop.
Appraised Value Based on Finished Product
Appraisals are important for home loans, but with renovation loans they can be fairly complex. There is a fundamental question: Which should a loan be based on, the current value of the home, or the value of the home once the renovations are complete? For this program, they are based on the value after completion. After all, the lender will hold a right over the home after renovations are complete, so it only makes sense to use the value of the property after renovation.
Multiple Types of Homes Available
If you are purchasing a home for your own personal use, a typical single-family home is not the only option. If you desire, you can use a HomeStyle Renovation Loan to purchase and renovate a modular home or a condo unit. You can also use them for a planned unit development.
Numerous Renovations Covered by These Loans
With this program, you can perform a vast variety of renovations and home improvements. From cosmetic changes that increase the curb appeal of the home, to vital structural changes that make the house safer and more reliable, you can complete a wide range of projects with funding through a HomeStyle Renovation Loan.
The funding can be used for:
- Adding square footage or new bedrooms to the home
- Constructing accessory dwelling units, aka “granny flats”
- Completing cosmetic updates, like new flooring, kitchens, and bathrooms
- Performing structural changes, like adjusting a load-bearing wall or repairing foundations
- Energy-efficient updates, like solar power, new windows, or low-flow toilets
- Plumbing and electrical updates
It can also be used for various expenses, beyond material costs and construction labor, including:
- Renovation expenses
- Permit fees
As you can see, using a HomeStyle Renovation Loan allows you to perform virtually all of the tasks you need to completely enhance, improve, and update a home.
Now is a Great Time for a HomeStyle Renovation Loan!
With recent increases to loan limits all across the country, now is a great time to use a HomeStyle Renovation Loan. There has been a cooling-off in the overall market, so sellers are more willing to negotiate with buyers using renovation loans, which increases the benefits of using a HomeStyle loan.
To move forward with a renovation loan, contact our staff today and we’ll get you started down the right path!
I was referred to Chad by my Realtor for a purchase of a new house. The experience with Chad and the team (I mainly worked with Juliann) was nothing short of outstanding. From start to finish there were always quick to respond and when needed, notify me of any new documentation that was required. There were very helpful explaining to me the pros and cons of different financing options as well as some other loan related issues, such as termite clearance outside the purchase contact and septic tank certification process. Overall, very knowledgeable and processional team. Loan preapproval was done in a single day and loan documents were ready for signing in 21 days, which was 9 days ahead of schedule. That never happened to me before.
“Chad and his team got me funded in less than 30 days, completing a deal that another broker fumbled around with for almost 90 days. Effective, efficient and excellent communication skills. Outstanding professionalism.”
Thank you, Chad. You have been amazingly responsive to all my questions, and you have a great staff assisting you. Thanks so much for all your help!