- One-time close home construction loan that finances home and its improvements
- Any permanent renovation that adds value to the home is eligible
- Can be used for “luxury” improvements such as swimming pools
- Borrower has 6 months to complete renovations
- Loan-To-Value is based on the home’s projected future price so borrower can afford construction costs
- Seller concessions are permitted up to 3%
- Can be used on vacation homes and investment properties
- Finances up to 6 months of mortgage payments if home cannot be occupied
What is a HomeStyle® Renovation Loan?
A FannieMae Homestyle® Renovation loan is a single-close loan used to make renovations to a 1- to 4-unit primary residence or a 1-unit second home/1-unit investment without needing a second method of financing. Borrowers can make improvements worth up to a total of 50% of the post-improvement appraisal. The loan can be used either when purchasing without the need for a home equity loan or the additional burden of a second set of closing costs.
How a HomeStyle® Renovation Loan Works:
The FannieMae HomeStyle® Renovation loan allows borrowers to take out the amount of the house’s projected appraised value. The borrower shares their planned home improvements with the lender so when the home is appraised as part of the mortgage approval process, the appraiser will base the value off the future worth of the finished house. This then ensures that borrowers have enough money to finance both the house and the construction costs without needing another loan. Borrower must choose their own licensed contractor. Also finances up to 6 months of mortgage payments if home cannot be occupied.