Fannie Mae HomeStyle Renovation Mortgage is a loan for people who want to buy a house that needs to be renovated. You can combine the cost of the house and renovation into one mortgage payment. This loan suits people who want to fix an older house or improve their current property. The loan is different from a construction loan, which is for building a new home. The loan is provided by Fannie Mae, which helps with mortgage transactions. You can get the loan by contacting local banks, credit unions, or lenders. Flexible payment options are available for different types of properties such as single-family homes, townhomes, condos, duplexes, and more. The down payment is typically 5%, but can be reduced to 3% with the HomeReady program. You can roll additional expenses such as living costs during renovation, closing costs, permits, and contingencies into the loan. The minimum credit score is 620, and interest rates are comparable to conventional mortgages.
Introduction
The Fannie Mae HomeStyle Renovation Mortgage is a type of loan that combines the cost of buying a house and any expenses for improving it. This loan suits people who want to buy a fixer-upper or improve an existing property. Unlike construction loans, the HomeStyle loan is specifically for purchasing a property needing renovation. Fannie Mae is a government-sponsored enterprise that helps banks manage their debts by buying mortgages from them. The HomeStyle loan works differently than a standard loan because the funds for buying the house are given at closing and must be used for improvements with the help of an approved contractor. It’s important to consider all options before choosing a loan.
Eligibility
To get a Fannie Mae HomeStyle Loan, you need to find a lender who offers this loan type, as Fannie Mae does not give loans directly to customers. Local banks, credit unions, and other lenders can guide people interested in HomeStyle loans. The HomeStyle Renovation loan includes many property types, such as single-family homes, townhomes, investment properties, and manufactured homes. The down payment requirement is 5% unless you qualify for the HomeReady program, which only requires 3%. If you put down less than 20%, you will need private mortgage insurance (PMI) until you have 20% home equity. The loan generally includes 3% to 5% of the home purchase price and renovation expenses. Down payments increase for multifamily properties and specific property types.
Contractor
Ready Nation Contractors in Florida has five licenses, which allows them to do almost any type of work. Fannie Mae HomeStyle loans require the buyer to use only one contractor for the work needed. Collaborating with Ready Nation Contractors can bring unparalleled expertise and convenience to the homebuying and renovating process. They have licenses for general contracting, roofing, heating, ventilation and air conditioning (HVAC), plumbing, and electrical services. They can handle all aspects of home renovation, ensuring top-notch work, simplifying communication, and providing in-depth knowledge of Florida’s building codes and climate-specific needs.
More Info
To get a HomeStyle loan from Fannie Mae, you need a credit score of at least 620 and a debt-to-income ratio below 50%. There are limits on how much you can borrow based on the loan limits for conforming loans in 2023. These loans don’t usually have higher interest rates because of renovation costs, and you can choose a 30-year or 15-year term. Other financing options are available, like FHA 203(k) loans, home equity loans, and HELOCs. Considering all options is essential when deciding which loan is right for you. HomeStyle loans are a good option for many homeowners looking to renovate their homes, but other options like cash-out refinancing and home equity loans should also be considered. You can apply for a HomeStyle loan online to see if you’re eligible and explore financing options for your specific renovation project.
