Thanks to increases in loan limits, a cooling of the real-estate market, and home prices remaining high in many areas, the time is right to use a HomeStyle Renovation loan from Fannie Mae.
These loans allow you to purchase and renovate a property with a single loan, and they are often a way to save a purchase that would otherwise be impossible.
With that in mind, we are proud to offer a HomeStyle Renovation program that has nine important distinctions…
Top 9 Most Important Distinctions for our HomeStyle Renovation Program
1. Provides Renovation Loans for a Second Home
With other renovation loans, you may find that you are only able to purchase a primary residence; if you want to purchase a second home, you may have to deal with strict limitations or higher interest rates. With HomeStyle, however, you can get financing for the purchase and renovation of a second home.
If you find a potential second home in an area that you love, but the property needs repairs and updates, you might assume that two loans would be needed: one for the purchase and one for the updates. HomeStyle relieves the potential problem with a single mortgage on your second home.
2. Can Also Be Used for Investment Properties
Investment properties often come with tighter restrictions compared to owner-occupied properties. This is because in times of financial trouble, owners are more likely to keep paying on their home than their investments. Think about it: if you could only make one mortgage payment, which would you choose: your family’s home or your investment property? The answer is obvious.
For this reason, investments tend to have higher interest rates and tighter restrictions, but you can use this renovation program to not only purchase an investment property, but to fund essential renovations that make the property viable for upcoming tenants.
3. Allows for a Purchase Price of Over $764,000 in Some Areas
The conforming loan limits across the country are constantly adjusted to accurately reflect current home prices. Currently, the conforming loan limit is $484,350, up more than $30,000 than the previous limit. This allows an owner-occupied renovation loan to finance a purchase up to $499,329 with 5% down. In areas of the country that are high costs locations, the purchase could be as high as $764,763 with only 5% down.
4. Can Be Used for a Multiunit Property
While there are certain restrictions, including two important requirement, you can use HomeStyle Renovation loans to purchase a property with as many as four units. The first big requirement is a 25% down payment, which represents a large amount for most buyers. (For every $100,000 in purchase price, you need $25,000.) The other requirement is that you need to be an owner-occupant in one of the units for a given period.
5. Allows for Financing with a Credit Score as Low as 620
Many loan products and lenders require that you have a high credit score to borrow money. This can be extremely limiting to numerous borrowers, and while our HomeStyle option has credit requirements, it is more lenient than many other options.
To use a HomeStyle Renovation loan, you need a credit score of 620. According to Experian, this is only a “fair” score. A “good” score is 670 to 739, while “very good” is 740 to 799. So if your score is only fair, but not good, you can still get the loan you need to purchase and renovate a property.
6. Multiple Loan Options Available
Different borrowers have different needs. To help secure appropriate financing for your specific situation, these loans are available in fixed-rate and adjustable rate loans. You can use HomeStyle to secure a 30-year fixed-rate mortgage, which is a popular option as it brings affordable monthly payments with consistent amounts that don’t change through the loan. You can also structure the loan as a 5/1 or 7/1 adjustable-rate mortgage. These are popular among some borrowers as they often bring affordable upfront costs. If you want to have various options when choosing your loan, this HomeStyle Renovation program may be the right choice for your needs.
7. Certain Modular Homes Can Be Purchased and Updated
With other programs, you may not be able to purchase a modular home, but this form of housing is an option with our HomeStyle Renovation loans. Modular homes are simply houses that are fabricated in sections inside a factory-like setting. They use all the same materials that are required of any home, but they are built in a closed, controlled setting, which increases efficiency. Sections are then shipped to the site and assembled on location.
Modular homes offer affordable housing for many borrowers, and there are first-rate options that meet a high demand for quality and sophistication.
8. Condos Eligible for HomeStyle Renovations
Using this program, you can also purchase a condo unit. Before purchasing with the intent to make chances, be sure to consult the guidelines of homeowner’s association, as they may have requirements for remodeling and renovations. By purchasing a condo, you’ll have affordable, convenient housing, and with a HomeStyle loan, you can design it to the specific standards that you prefer. This can be a good option if you’re moving to an area with limited available housing and simply need a small, convenient residence.
9. Planned Unit Developments Can Be Purchased and Renovated
A planned unit development, “PUD,” is a community of homes that look like single-family homes or townhomes. With this type of property, you own a specific lot, much like you own a condo unit, and there are common areas as well as a homeowner’s association. They often have amenities such as tennis courts or pools. Using a HomeStyle loan, you could purchase and renovate a PUD, but once again you’ll need to check the specific requirements of the HOA before making any changes.
Learn More About HomeStyle Renovation Loans
HomeStyle Renovation loans from Fannie Mae create new purchasing options for aspiring homeowners. Contact our staff today to learn more about the benefits to this important program.
