Home Improvement with a Renovation Loan
These days, it seems that everyone is hopping on the DIY train. With tutorials all over social media, YouTube and blogs, it’s no wonder people are trying their hands at home projects! However, some projects, especially larger ones, are best to be left to licensed professionals. The cost to fund these home improvements can add up quickly, which is why renovation loans are so popular right now!
There are several types of renovation loans available to eligible homeowners, but in this article, we’ll be focusing specifically on 3 that are offered here at C&F Mortgage: the FHA 203(k) loan, Fannie Mae Homestyle loan, and VA Renovation loan. It is important to note that these renovation loans require a licensed professional.
FHA 203(k) Loan Program
This renovation loan option is backed by the Federal Housing Administration and is helpful when purchasing or refinancing a home that needs significant repairs and remodeling. This program is only available for your primary residence, so you couldn’t use this for a vacation home fixer-upper. Similar to a standard FHA loan, you’re only required to have a 3.5% down payment and you can receive monetary gifts from family to put toward the purchase. There are two types: a Limited and a Standard 203(k) loan. The Limited option is capped at $35,000 and requires that the home be habitable while the renovation is taking place. The Standard option is a lot more intensive, requiring more paperwork and oversight, but the amount that can be borrowed is much greater and is determined based on the project specifications. A Standard loan is a suitable option for a major home renovation, whereas the Limited may be a good fit for smaller projects.
Fannie Mae Homestyle Loan Program
The Fannie Mae Homestyle renovation loan offers a bit more flexibility and can be used for improving primary, secondary, and investment properties. All of the improvements can be financed (can’t exceed 75% of as completed value) so long as they add value to the home, even items such as an in-ground pool. This program can be used for a purchase or a refinance and requires as little as 5% down on primary residences and 10% down on second homes and investment properties. The Fannie Mae Homestyle program can be used on any type of home renovation or repair project, from small to significant.
VA Renovation Loan
The VA Renovation Loan is a program that is available to qualified US veterans or their surviving spouses, similar to the traditional VA Loan program. Eligible individuals can borrow up to 100% of the sales price plus repair costs or the ‘after approved’ value of the home, whichever is less. To determine the ‘after approved’ value of the home, borrowers must obtain itemized improvement quotes from contractors to be used to calculate the home’s value with improvements.
Like a traditional VA Loan, no down payment or monthly mortgage insurance is required. This program can be used with a purchase or refinance of a primary residence only, with a maximum of $50,000 in repairs.
At C&F Mortgage, we’re always focused on you. Our team of local industry experts is here to make your homeownership dreams a reality – get in touch with us today to discover which renovation programs are right for you.
Edited 4/9/2021. The information contained herein (including but not limited to any description of C&F Mortgage Corporation and its lending programs and products, eligibility criteria, interest rates, fees and all other loan terms) is subject to change without notice. Restrictions apply. This is an advertisement and not a commitment to lend. C&F Mortgage Corporation NMLS# 147312 Equal Housing Lender.