Fannie Mae Homestyle Renovation Loan
The Homestyle Renovation Loan allows for the borrower to roll their home improvement expenses along with their regular mortgage into one mortgage. It allows borrowers to do this either through purchase or through refinancing. The Homestyle Renovation Loan allows for these repairs to cost up to 75% of the as-completed appraised value of the home. This amount includes hard costs, contingency reserve, inspection fees, title updates, permits supplemental origination, etc.
How Is It Different Than the FHA 203K Loan?
The Fannie Mae Homestyle Renovation Loan is different than the FHA 203K Loan in a variety of ways. One way is that the home does not have to be owner-occupied. The home can be owner-occupied or it can be a second home* or an investment home* (certain conditions do apply). The loan to value guideline ratio is different as well. The FHA 203K Loans require 96.5% for purchase and 97.75% for refinance, but the Homestyle Loan requires 95% for purchase or refinance. For a more direct comparison of these different renovation loans, check out our 203(K) vs. Homestyle Renovation page.
What Types of Renovations Does the Homestyle Loan Allow?
There is no minimum to the amount of repairs with the Homestyle Renovation Loan. It allows the repairs to cost up to 75% of the as-completed appraised value of the property. The only requirements for the repairs and improvements approved for the Homestyle Loan are that they must be permanently affixed to the real property and add value to the property. In other words, any repair or improvement that is affixed to the property and adds value to the property can be financed by through the Fannie Mae Homestyle Renovation Loan.
What Else Should I Know?
The Homestyle Renovation Loan allows for escrowed mortgage payments for up to six months. The borrower is only allowed one contractor (must be a general contractor). The Homestyle Loan allows for anywhere from 1 to 5 draws. The actual number of draws is determined by the Project Inspector. No disbursements are made at closing and no materials draws are allowed, draw funds released for work completed at time of inspection report.
Does it sound like a Fannie Mae Homestyle Renovation Loan might be right for you? If you would like to apply for one or even if you have questions or would just like to know more, please give us a call! We'd love to talk with you.