A renovation loan is a phenomenal option for those looking for a fixer upper, those struggling to find something that meets their home desires or those who can’t afford a brand new house in the area they wish to live. A renovation loan allows the borrower to finance both the cost of the home and the desired repairs all in one mortgage. With multiple renovation loan options, we can help determine which type of renovation loan is right for a buyer in any given scenario.

HomeStyle Renovation Loans:

  • A conventional mortgage that allows the borrower to make any repairs that are permanently affixed to the property.
  • This loan can accommodate both structural and non-structural repairs.  Landscaping and site amenities are allowed.
  • LTV (Mortgage Insurance is required for any LTV that exceeds 80%):
    • 1 Unit Primary – 97% LTV if at least one borrower is a 1st time homebuyer, otherwise 95%
    • 1 Unit Second Home 90% LTV
    • 1 Unit Investment – 85% LTV

FHA 203k Standard Loans:

  • Used when a home needs structural work, involves non-safety related landscaping, or when the renovation costs exceed $35,000. This loan requires a minimum of $5,000 in repairs.
  • There is no cap on the renovation budget (FHA maximum loan limits apply).
  • The borrower is required to have a HUD Consultant in addition to a contractor. The HUD Consultant will help ensure that all minimum property standards are met and that the contractor has completed the work according to contract.
  • LTV: 96.5%

FHA 203k Limited Loans:

  • Used when a home needs non-structural/cosmetic work. The total renovation budget must be less than $35,000.
  • There is no minimum dollar amount for repairs.
  • The FHA 203k Limited Loan does not require a HUD Consultant. The borrower will complete a written work plan which will demonstrate their understanding of the contractor’s bid.
  • Mortgage payments cannot be financed with this loan.
  • LTV: 96.5%

Jumbo Renovation Loans:

  • 1-unit primary residence only
  • Max loan limit $1,000,000
  • 12-month renovation term, 18 months for teardowns; 12-month PITI asset reserve, 18 months on teardowns
    • A teardown is defined as an existing dwelling being completely demolished and reconstructed on the existing foundation, the existing foundation which is being added on to, or a completely new foundation on the same original parcel.
  • Landscaping and/or site amenities are allowed, must be permanently affixed to the property
  • Can be used to add a swimming pool
  • Material draws allowed, capped at 50% of the total material budget
  • Partially completed projects are allowed with prior approval
  • Can be used to finish new construction, when the home is at least 90% complete
  • Renovation Purchase or Refinance – 90% LTV and 720 Mid Credit Score
  • Teardown Purchase or Refinance – 80% LTV and 740 Mid Credit Score

VA Renovation Loans:

  • 1-unit primary
  • Used when a home needs non-structural/cosmetic work.
  • The total renovation budget cannot exceed $35,000 (includes soft costs and contingency).
  • There is no minimum rehabilitation cost.
  • All repairs must be completed within 90 days of closing
  • Contractors must be validated and registered with the VA, valid VA Builder ID
  • Project must be completed by one General or Licensed Trade Contractor, additional specialty contractor if required
  • 50% draw is available at close, final draw when work is completed
  • For condos, interior rehabilitation is permitted only (no common areas)
  • 100% LTV for 1-unit primary purchases

Do you have a property that we can assist you in marketing as a renovation loan or a client who may benefit from this product? Give us a call!