Mortgage
April 22, 2020

Your Guide to Renovation Loans

Sometimes the home you want isn’t perfect. Everyone has different requirements and expectations of their home. Often, your dream house might need a little love to get where you want it.  

Are you looking to purchase a new home and are curious if you can include renovation costs in your mortgage? Or maybe you’re looking to renovate your current home and would like to include the renovation costs in one loan? No matter what you’re looking for, there are plenty of options for renovation loans that can help you reach your goals.

Who Would Benefit from a Renovation Loan?

  • A first-time homebuyer looking to save money and spend less on an affordable home
  • Someone looking for a home in a specific location that might be older or in need of renovations and repairs
  • Someone looking to buy a home, fix it up, and resell it for a profit

What Types of Renovation Loans Are Available?

Homestead offers several options for renovation loans so you can achieve your goals no matter what they are. Loan limits apply and vary depending on program and property location.

  • HomeStyle® Renovation
  • FHA 203K Standard Renovation
  • FHA 203K Limited Renovation
  • FHA Energy Efficient Mortgage (EEM)

HomeStyle® Renovation

HomeStyle® Renovation loans are good for covering the cost of purchasing a home as well as including money for improvements and renovations. They are very versatile and can accommodate a wide range of situations.  Homestyle loans are great for almost any type of improvement, including luxury improvements such as swimming pools. The loan amount is based on the “as completed value of the home rather than the present value.

FHA 203(K) Standard Renovation

FHA 203(K) Standard Renovation loans can be an affordable way to fund home improvements whether you’re renovating your current home or are buying a home that needs some work. These types of loans are designed to be used for more complex projects such like room additions, exterior grading, and landscaping or reconstruction that would prevent you from immediately moving into the home. It is also used for renovations that require engineering or architectural drawings and inspections. This type of loan does not allow luxury projects.

FHA 203(K)  Limited Renovation

The FHA 203(K) Limited Renovation loan is similar to the FHA 203(K) Standard Renovation loan but has some differences. For one, there is no consultant or plan reviewer required, no detailed work write-up, and you only need contractor bids and a signed contract. Borrowers may finance renovation costs up to $35,000 or up to $50,000 if the property is in a Qualified Opportunity Zone for non-structural related property repairs and improvements.

FHA Energy Efficient Mortgage (EEM)

The Energy Efficient Mortgage is availableto help finance energy efficient improvements for your home. These loans allow for eligible energy efficient improvements  to be included in your mortgage. This includes improvements such as repairing dated windows, insufficient insulation, inefficient furnaces or water heaters, and any other feature in the home that compromises its energy efficiency.

Whether you’re looking to enhance your current home with renovations or include the cost of renovations and repairs in the mortgage for a new home, Homestead offers the programs and the service to satisfy your needs. Contact us today to find out how you can get started.