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.
A HomeStyle Renovation Loan:
• 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%):
o 1 Unit Primary – 97% LTV if at least one borrower is a 1st time homebuyer, otherwise 95%
o 1 Unit Second Home 90% LTV
o 1 Unit Investment – 85% LTV
FHA 203k Standard Loan:
• 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 Loan:
• 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 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%
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!