According to Zillow, the number of “fixer-upper” homes on the market is now 12% higher than 2012. This means home remodeling is on the rise—and we’ve got the perfect renovation loan options to make financing the remodel as simple and smooth as possible. Between Fannie Mae’s HomeStyle mortgage and the FHA’s 203K mortgage, the renovation loan will be a one-time-close with multiple financial benefits. Let’s take a closer look to determine which renovation loan is right for you.
Fannie Mae’s HomeStyle mortgage “is a conventional renovation loan that can be used at purchase time or as a refinance loan for those wanting to update a home they already own” (Perry Farella, author of “Rehab Dollars & Sense”). Compared to most FHA loans, it offers a high loan limit for renovating properties of 1 to 4 units and proves to be a great loan for property investors. According to Farella, “HomeStyle is designed to allow investors to participate in renovation lending versus FHA 203K, which is only for those that will actually live in the property.”
FHA’s 203K mortgage requires the borrower to live in the property for a minimum of 12 months in order to qualify. It’s a great renovation loan for borrowers looking to become permanent homeowners, as the 203K mortgage can be used to buy 1 to 4 units of property and permits the homeowner to borrow up to 110% of the home value with a very low down payment—only 3.5% on the combined purchase and renovation cost! According to Farella, “the 203K loan is the entry loan to becoming a property investor because FHA requires you live in the home for one year. But then it can be turned into a rental or sold for a return, and the owner can move on to another property.”
With two great renovation loan options, it may be difficult to choose one. For more information about Fannie Mae’s HomeStyle mortgage or FHA’s 203K mortgage, contact one of our mortgage specialists today.