If you are an investor who is looking to purchase a home that is currently owned by Fannie Mae but the home needs renovations – Fannie Mae has a great loan program designed just for this situation that is a close cousin to the Fannie Mae HomePath mortgage program but designed just for investors.
It is called the Fannie Mae HomeStyle Renovation Mortgage program.
The HomeStyle Renovation mortgage program allows borrowers to combine the cost of the home with the costs for renovation or remodeling.
At closing, all funds for renovation will be escrowed in an interest-bearing account. After all renovation work is complete, any remaining funds in the escrow account will be used to pay down the principal balance of the mortgage.
Fannie Mae HomeStyle Renovation Mortgage Highlights:
- Up to 95% LTV
- Renovation funds escrowed in an interest bearing account
- Soft costs (architectural services, engineering, permit fees, etc.) may be financed
- Loans are underwritten to FNMA guidelines
HomeStyle Renovation Mortgage: More Information
Borrowers can basically do any repairs / renovation to the home that they want as long as the appraisal supports the value, the improvements are common for the area (pools, for example), the repairs can be completed within six months, and the repairs do not exceed 50% of the after improved appraised value.
The only types of repair that I would not recommend under the HomeStyle Renovation mortgage program are water damage, mold, and any structural repairs to the foundation and/or load bearing walls. These types of repairs have a tendency to escalate into much larger projects once the builder does the demo and determines what the actual repairs are needed to fix the damage to the property.
Have more questions about the HomeStyle Renovation mortgage? We are happy to help.
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Can the Fannie Mae HomeStyle Renovation Mortgage be used for non-Fannie Mae owned homes?
What lenders in the Arizona area offer homestyle renovation loans? I have yet to find one, much less one that is seasoned in this type of lending.