Mortgages, like the Fannie Mae HomeStyle & 203(k), are mortgages that
permit borrowers to include financing for home improvements in the mortgage
transaction of an existing house. Both can be used to acquire and renovate
existing properties or to refinance and renovate currently owned
properties. Each type of loan has
variations in guidelines and borrower qualifications.
THE HOMESTYLE RENOVATION MORTGAGE
Homestyle Renovation Mortgage is a Fannie Mae Conventional loan product that
enables the borrower to include financing for home improvements into a purchase
or refinance mortgage loan with one closing.
underwriting requirements are similar to those of a typical Conventional
loan. Eligible borrowers include individual home buyers and
investors. The property need not be owner occupied to qualify for a
Homestyle Renovation Mortgage. There are no requirements or restrictions
on the types of repairs or remodeling allowed, even luxury improvements are
eligible. The borrower may borrow up to 95% (90% for investment
properties) of the future value of the home after renovations are made.
Loans made at more than 80% of property value require Private Mortgage
Insurance. Like other Conventional loans, the mortgage insurance is
terminated once the borrower has 20% equity in the home. Eligible property types for a Homestyle
Renovation Mortgage are a 1-4 family house, a townhouse, an approved
Condominium, or a Planned Unit Development.
203(k) is an FHA loan program that enables the borrower to finance the purchase
and the renovation/ rehabilitation of a home all in one loan with one
closing. The 203(k) loan can also be used to refinance an existing
mortgage, adding the costs to renovate or remodel that home. Eligible
borrowers may finance up to 96 ½ % of the future value of the home after the
renovations have been completed.
203(k) loan is for owner occupied properties only. The property must be
the home owner's primary residence. Eligible properties include 1-4
family homes, FHA approved condos, and mixed-use properties as long as the
improvements are made on the residential portion of the property.
underwriting guidelines are the same as for other FHA loans, so they are less
strict than Conventional loans allowing for lower credit scores, higher debt to
income ratios, gifts and sellers concessions.
Like all FHA loans, 203(k)s require mortgage insurance for the life of
are two types of FHA 203k mortgage loans, traditional and streamlined.
The streamlined 203k is used for non-structural repairs under $35,000 such as
painting and new appliances. The traditional 203k is for properties that
need structural repairs such as a new roof or a room addition. Because
they are more complicated in nature, traditional 203(k) loans require the use
of an independent HUD 203(k) counselor. Among the other repairs/ renovations
that a 203k loan will cover are the construction of a new deck or patio,
bathroom and kitchen remodels, flooring, plumbing, new siding, additions to the
home such as a second story, new heating and air conditioning systems, etc...
The 203k will not cover luxury improvements such as adding a tennis court or
pool to the property.
To learn more about the Renovation Mortgages like Homestyle or 203(k) or to apply, contact us today at 888-933-8639.