The Fannie Mae HomStyle® Renovation loan allows a qualified borrower to purchase or refinance a home and finance with one loan, the cost of renovations/repairs into their overall loan. The total renovation cost cannot exceed 75% of the after completed value of the home based on the appraisal or the total acquisition cost whichever is less. The sales price plus the total cost of renovations is considered the total acquisition cost.
This program allows the borrower to finance into the loan limited/non-comprehensive repairs:
- repairs that are not structural in nature,
- do not require plans, and
- cost less than $35,000 in total renovation costs including miscellaneous fees which we will address later in this document.
NFM Lending requires a minimum of $3,500 in repairs for this program. A HUD consultant is not required to perform an inspection of the property on this type of renovation program but may be used.
The standard/full HomStyle® program allows the borrower to finance any type of repair including structural alterations and repairs, additions, work that requires architectural plans, and much more. The borrower must meet with a HUD consultant to determine the repairs to be included into the loan.
Up to 6 months mortgage payments can be financed into the loan, for the time that the HUD consultant deems the house uninhabitable during the renovation period. Please inquire about the availability of mortgage payment financing with your renovation specialist.
All loans require the use of a licensed contractor and repairs must “add value” to the home. Any repairs including the cost, materials used, scope of work, etc should be completely decided upon prior to closing. Changes to the original scope of work after closing need to be prior approved by NFM Lending and must meet Fannie Mae’s requirement of having to add value to the property. The borrower cannot act as their own contractor, and borrower cannot be related to the contractor. The contractor must be licensed and insured as a home improvement contractor and/or specialty contractor in the state/local jurisdiction where the work is being done. Choosing the right contractor is crucial to making sure that there are no issues after the work begins. It’s very important to obtain the contractors credentials up front and present them to NFM Lending for review as soon as possible.
The Homestyle® loan requires a minimum down payment of 3% for first-time home buyers, and 5% if not a first-time homebuyer, of the total acquisition cost or appraised value, whichever is less. An as completed/after improved appraisal will be used in determining the maximum loan amount. The loan amount is calculated based on the sales price, or payoff if a refinance, plus total renovation cost plus, if the loan is a refinance, closing costs/prepaid items. An additional down payment is required if property is a condominium, second hone, investment property, and 1-4 unit properties. Please check with your renovation specialist for specifics.
After loan closing, the renovation funds are held in an interest- bearing escrow account.
Ready to Get Started?
For more information about the HomeStyle® loan and how you can finance renovations or home improvements, fill out the contact form below and one of our licensed renovation loan originators will be in contact with you soon.
Make sure you understand the features associated with the loan program you choose, and that it meets your unique financial needs. Subject to Debt-to-Income and Underwriting requirements. This is not a credit decision or a commitment to lend. Eligibility is subject to completion of an application and verification of home ownership, occupancy, title, income, employment, credit, home value, collateral, and underwriting requirements. Not all programs are available in all areas. Offers may vary and are subject to change at any time without notice.
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