Found a home in an area with only fixer uppers? Want to renovate your current home? Not sure what to do? There's a Fannie Mae program for you.
Here's everything you need to know about Fannie Mae's HomeStyle Renovation Loan program.
Sometimes, there's just nothing quite like what you want out in the marketplace. What happens then? Is all lost? Not anymore. Enter the Fannie Mae HomeStyle Renovation loan.
The Fannie Mae HomeStyle loan is a conventional loan that is tasked with making it easier to make your fixer upper yours. As opposed to having to take out one loan to purchase your new home and then another one to cover the cost of renovations, the HomeStyle loan allows you to roll both costs into one.
How does this help you? Well, you're able to save on costly interest payment and roll up your closing costs into one loan as opposed to two.
How does it work? The HomeStyle loan is different in that, rather than being based off the current value of the home like most other mortgages, it allows buyers to borrow against the "subject to" value of the home, which estimates what the home will be worth once all the renovations have been completed in an appraisal. This is what the LTV (loan-to-value) is based on.
If you're purchasing, the minimum down payment is only 5%, and if you're refinancing, you may not have to pay anything!
The HomeStyle loan encompasses everything that normal conventional loans do also: cancel-able mortgage insurance after 20% equity, use on primary, secondary, and investment properties; the ability to use it on whatever type of renovation you'd like, as long as the value increases.
Types of improvements you can make:
- Kitchen/bath renovations
- New appliances
- Room additions
- Swimming pool and spa
- New flooring, painting
- Basement remodel
- New roof
- Structural changes and more!
Getting financed for your renovation is easier than you might think.