When to Consider a Renovation Loan

Sometimes you find a great house, but it needs a little bit of TLC. That is where a renovation loan comes in to the picture. A renovation loan, or 203(k), makes the process easier by allowing you to combine your renovation costs into your mortgage, helping you fund your home improvements. That means one loan and one closing, and a lot less stress on you!

There are a few different types of renovation loans offered that help fund minor repairs to major rehabilitation. Take a look at the overview below and decide which one will help you complete your dream home.

Standard 203(k) Mortgage Program: Use this program if you are looking to do large scale renovations, remodeling and repairs, and when a 203(k) consultant is required.

  • No maximum repair cost amount, minimum $5,000 in eligible improvements required.
  • Renovating/Remodeling: converting a 1-family structure to a 2-4 family structure, alterations such as repair or replacement of structural damage, constructing a garage, creating accessibility for persons with disabilities.
  • Repairs: fixing HVAC systems, decks, patios, porches, well and/or septic systems.
  • Energy conservation improvements: adding insulation, replacing windows and doors, install energy efficient lighting.
  • Landscaping.
  • May not be used for luxury items that do not become a permanent part of the property: swimming pools and hot tubs, bath houses, outdoor fireplaces, gazebos.
  • Minimum down payment of 3.5% for purchases, 2.25% for rate/term refinances.
  • Owner-occupied property only.

Limited 203k Mortgage Program: This program may only be used for minor remodeling and non-structural repairs. A 203(k) consultant is not required, but may be used for the project.

  • Maximum repair cost $35,000.
  • Improve house function and modernization: installing a new refrigerator, cooktop, oven, dishwasher, and/or washer/dryer, installing smoke detectors.
  • Connecting to public water and sewage systems.
  • Installing or repairing fences, walkways, and driveways, repairing old or damaged siding, gutters and downspouts.
  • May not be used for luxury items that do not become a permanent part of the property: swimming pools and hot tubs, bath houses, outdoor fireplaces, gazebos.
  • Repairs and improvements are completed in 6 months or less.
  • Minimum down payment of 3.5% for purchases, 2.25% for rate/term refinances.
  • Owner-occupied property only.

Fannie Mae HomeStyle® Renovation Mortgage: There are no required improvements or restrictions on the types of renovations allowed.

  • No minimum dollar amount required for improvements, however, a HUD-approved consultant must be used when repairs and renovations exceed $15,000.
  • May be used to complete final work on a newly built home when the home is at least 90% complete, remaining improvements must be related to completing non-structural items such as installation of buyer-selected items (flooring, cabinets, kitchen appliances, fixtures, and trim, etc.).
  • May not be used for complete tear-down and reconstruction.
  • May be used to construct outdoor buildings and structures such as swimming pools, garages, recreation rooms and accessory units.
  • Repairs and improvements are completed in 6 months or less.
  • Minimum down payment is dependent upon transaction type (3-25% required).

 

Already own your home but need to make some updates and repairs? We also offer renovation loans for refinances.

 

Contact a First Home Loan Officer in your area to discuss which option best fits your needs.

 

 

HomeStyle® is a registered trademark of Fannie Mae.

Home Design Application Must-Haves

Did you buy a home and need inspiration to decorate it? Or, do you currently own a home and need an interior update?  These smartphone apps are perfect for you!  They help inspire home improvement, all in the palm of your hand.  These apps are smartphone Android and iOS friendly, at a minimal fee or no price at all.  If you are looking to buy in the near future and need help getting started, contact a First Home Mortgage Loan Officer for more information.  Once your dream home is yours, you can put these apps to the test.

Zillow Digs

Zillow currently provides a price estimate on the majority of real estate in America.  Their website provides an online, searchable database easily accessible to all.  They now offer an app for home improvement and design.  It allows you to choose an array of interior projects that matches your price point.  Zillow digs also provides advice from real designers and allows you to share with others on social media.

ColorSnap

This app allows for you to view 1,500 different shades of Sherman-Williams’ paint inventory and will allow you to apply it to any of its virtual sample rooms.  Not only do you get to see how different colors look in different rooms, it will also analyze colors of any photo on your smartphone and inform you of what shade of paint it is.

Houzz

Houzz contains more than 5 million high resolution home images that are tagged and organized according to style, room and location. You can search your favorite looks and save them in an “idea book” to later refer to when needed.  It also includes real-life design consultants that you can share and request ideas from.

Other top home designing applications that you can download are Homestyler Interior Design, Curate, Like That Décor and Furniture, MagicPlan, MyPantone, BrightNest and Home Design 3D Gold.

Love the ideas you find on these applications but need the finances to do them? First Home Mortgage offers Renovation loans for home improvements.  Contact a First Home Mortgage Loan Officer now to learn more. Click Here

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