Stewart Brown Jr – Mortgage Loan Originator – Purchase or Refinance
| There are several options available for obtaining a renovation loan. The most popular are the FHA 203(k) Limited, the FHA 203(k) Standard, and the Fannie Mae HomeStyle Limited and Standard. Overall, the FHA 203k limited program is intended for limited repairs not to exceed $35k in renovation costs. With this option, there cannot be any structural repairs. With an FHA 203k Standard program these are for projects that have greater than $35k in renovation costs and can include structural repairs. Similarly, Fannie Mae’s HomeStyle Limited is the conventional counterpart and allows up to $50k for the Limited option and over $50k in renovation costs for the Standard option. There’s also a lesser known renovation for veterans, the VA Renovation loan, that is typically capped at $50k as well. |
| There are several options available for obtaining a renovation loan. The most popular are the FHA 203(k) Limited, the FHA 203(k) Standard, and the Fannie Mae HomeStyle Limited and Standard. Overall, the FHA 203k limited program is intended for limited repairs not to exceed $35k in renovation costs. With this option, there cannot be any structural repairs. With an FHA 203k Standard program these are for projects that have greater than $35k in renovation costs and can include structural repairs. Similarly, Fannie Mae’s HomeStyle Limited is the conventional counterpart and allows up to $50k for the Limited option and over $50k in renovation costs for the Standard option. There’s also a lesser known renovation for veterans, the VA Renovation loan, that is typically capped at $50k as well. |
| Eligible property types for renovation loans include: Single Family Residence (SFR), 1 – 4 unit properties, condominiums, Planned Unit Developments (PUD), and modular homes. Manufactured home are not allowed under any circumstances. In regards to eligible occupancy types, owner occupied, second homes and investment properties are all permitted. However, loan to value (LTVs) for each occupancy type are as follows: 95% LTV max O/O, 90% LTV max on second homes and 80% LTV max on investment properties on SFR only. |
| Eligible property types for renovation loans include: Single Family Residence (SFR), 1 – 4 unit properties, condominiums, Planned Unit Developments (PUD), and modular homes. Manufactured home are not allowed under any circumstances. In regards to eligible occupancy types, owner occupied, second homes and investment properties are all permitted. However, loan to value (LTVs) for each occupancy type are as follows: 95% LTV max O/O, 90% LTV max on second homes and 80% LTV max on investment properties on SFR only. |
| There are several benefits associated with a renovation loan including: (1) increasing your home’s value (2) the ability to customize and personalize the home to fit your lifestyle (3) energy efficiency savings (4) a wider range of homes become available when you open the door to a renovation loan and (5) provides financing for homes otherwise out of reach or undesirable. |
| There are several benefits associated with a renovation loan including: (1) increasing your home’s value (2) the ability to customize and personalize the home to fit your lifestyle (3) energy efficiency savings (4) a wider range of homes become available when you open the door to a renovation loan and (5) provides financing for homes otherwise out of reach or undesirable. |
| The critical thing to remember with a renovation loan is that the borrower always selects their contractor. Essentially, the contractor must have three references and these must be within the last six months and be similar in size and scope. The contractor must also have liability insurance with at least $1 million in coverage and the policy must be active throughout the entire project. Lastly, the contractor must be licensed for the work being performed and the license must be active. |
| The critical thing to remember with a renovation loan is that the borrower always selects their contractor. Essentially, the contractor must have three references and these must be within the last six months and be similar in size and scope. The contractor must also have liability insurance with at least $1 million in coverage and the policy must be active throughout the entire project. Lastly, the contractor must be licensed for the work being performed and the license must be active. |
| The costs associated with a renovation loan may be financed into the rehab account for permits, inspections, title updates, architectural, HUD consultant and supplemental origination fee. Contingency reserves of 10-15%. |
| The costs associated with a renovation loan may be financed into the rehab account for permits, inspections, title updates, architectural, HUD consultant and supplemental origination fee. Contingency reserves of 10-15%. |
| An awesome thing most people might now be aware of is that all HUD foreclosures can be financed with a FHA 203(k) loan. Properties may be eligible for the $100 down payment feature through HUD. Standard FHA guidelines still apply. The renovation loan is based on the “After Improved Value.” HUD allows for up to a 3% Closing Cost Credit and you may be able to finance the overbid. |
| An awesome thing most people might now be aware of is that all HUD foreclosures can be financed with a FHA 203(k) loan. Properties may be eligible for the $100 down payment feature through HUD. Standard FHA guidelines still apply. The renovation loan is based on the “After Improved Value.” HUD allows for up to a 3% Closing Cost Credit and you may be able to finance the overbid. |
| With an FHA 203k Standard program these are for projects that have greater than $35k in renovation costs and can include structural repairs. |
| With an FHA 203k Standard program these are for projects that have greater than $35k in renovation costs and can include structural repairs. |
| Overall, the FHA 203k limited program is intended for limited repairs not to exceed $35k in renovation costs. With this option, there cannot be any structural repairs. |
| Overall, the FHA 203k limited program is intended for limited repairs not to exceed $35k in renovation costs. With this option, there cannot be any structural repairs. |
| The Fannie Mae HomeStyle renovation loans include the following highlights: (1) high balance loan amounts are allowed (2) these can include luxury ticket items which are permanently affixed to the property (3) can increase the size and footprint of the home (4) can finance up to six months of mortgage payments to cover non-occupancy costs during construction. A consultant must be used and this is for owner occupied properties only. (5) Standard conventional guidelines apply (6) will require a HUD consultant and (7) Certificate of Occupancy is not required. |
| The Fannie Mae HomeStyle renovation loans include the following highlights: (1) high balance loan amounts are allowed (2) these can include luxury ticket items which are permanently affixed to the property (3) can increase the size and footprint of the home (4) can finance up to six months of mortgage payments to cover non-occupancy costs during construction. A consultant must be used and this is for owner occupied properties only. (5) Standard conventional guidelines apply (6) will require a HUD consultant and (7) Certificate of Occupancy is not required. |
| The Fannie Mae HomeStyle Limited program is intended for limited repairs not to exceed $50k that require little homeowner expertise to manage. No structural repairs are permitted. |
| The Fannie Mae HomeStyle Limited program is intended for limited repairs not to exceed $50k that require little homeowner expertise to manage. No structural repairs are permitted. |
| The Fannie Mae HomeStyle Standard program is designed for those projects requiring a higher level of supervision throughout the project from estimates through completion. Greater than a $50k total rehab account. Structural repairs are allowed. |
| The Fannie Mae HomeStyle Standard program is designed for those projects requiring a higher level of supervision throughout the project from estimates through completion. Greater than a $50k total rehab account. Structural repairs are allowed. |
| A licensed HUD Consultant is required on an FHA 203(k) Standard renovation loan that has renovation costs greater than $35k or homes requiring structural repairs. The HUD Consultant will meet the borrower(s) at the property, inspect it for required repairs and discuss the renovation budget. They will also complete the Work Write Up Report including details of all repairs and estimated costs and a timeline for completion. The consultant will also reconcile the Contractor’s Estimate/Bid. They work with the Contractor and establishes draw parameters. Finally, they will perform draw inspections during the renovation up to five inspections and authorize the disbursement of funds. |
| A licensed HUD Consultant is required on an FHA 203(k) Standard renovation loan that has renovation costs greater than $35k or homes requiring structural repairs. The HUD Consultant will meet the borrower(s) at the property, inspect it for required repairs and discuss the renovation budget. They will also complete the Work Write Up Report including details of all repairs and estimated costs and a timeline for completion. The consultant will also reconcile the Contractor’s Estimate/Bid. They work with the Contractor and establishes draw parameters. Finally, they will perform draw inspections during the renovation up to five inspections and authorize the disbursement of funds. |
Reach out to me for further detailed information on Renovation loan programs.