What is a Renovation Loan?
When using a renovation mortgage loan to purchase a new home, we will combine the amount of the purchase contract and the necessary repairs and improvements to calculate your adjusted sales price. You can also use a renovation loan to refinance your existing mortgage and finance the costs of your desired repairs and improvements into the new home loan.
Talk Through My OptionsIf the house is uninhabitable while being renovated, you can finance up to six months of your mortgage payment into the loan to alleviate you and your family from having to make two payments at the same time.
Eligible repairs and upgrades may vary from loan program to loan program, so be sure to ask your local mortgage advisor about all your options when discussing the specific details of your project.
Renovation Loan Highlights
When shopping for a home, you may come across properties that aren't quite what you're looking for but have the potential to be your dream home with some repairs or renovations. With a renovation loan, you can roll the cost of financing or refinancing a home and repairs into one loan – saving you time and money.
Renovation Loan FAQs
Renovation Loan Options Also Include:
HomeStyle Renovation Loans
You can use a Fannie Mae HomeStyle Renovation loan to finance just about any type of upgrades on a primary residence, a second home or an investment property. This even includes some "luxury" items like a brand new in-ground swimming pool. There are no required improvements or restrictions on the types of repairs allowed, nor is there a minimum dollar amount for the repairs. However, repairs or improvements must be permanently affixed to the real property and be completed by a licensed contractor.
Limited 203(k) Rehabilitation Mortgage
In addition to financing the purchase of your new home, an FHA Limited 203(k) can provide up to $35,000 in additional funds for alterations to your new or existing home. Keep in mind that the scope of repairs is limited to minor, cosmetic, non-structural items, such as updating a kitchen or bathroom with new flooring or cabinets, or for purchasing new appliances.
Standard 203(k) Rehabilitation Mortgage
If the home you are considering needs more than $35,000 in repairs and improvements, or if the repairs needed are structural in nature, the Standard FHA 203(k) might be the right solution. The Standard FHA 203(k) option is ideal for more intensive home remodels and can provide additional funds*** to help with eligible repairs, including adding additional square footage.
*** Final disbursement of funds is subject to final inspection.
If your new home doesn't need any immediate repairs, you might simply want to look into Conventional Loans, and you can easily estimate your standard monthly costs using our Mortgage Payment Calculator.
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Schedule a quick consultation and we'll help you navigate the choices and find the best fit for your home improvement goals.
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