One loan with two purposes. That’s the idea behind Fannie Mae’s HomeStyle® program, a truly unique Texas home renovation loan. Let’s delve into this popular fixed-rate mortgage product that allows buyers to finance a home’s purchase and its upgrades at once.
How does the HomeStyle loan work?
Designed for people looking to purchase fixer-uppers, or otherwise improve an existing home, the loan allows borrowers to bundle the renovation costs into their monthly mortgage payments. At closing, the new homeowner gets the money for the purchase as one would with a conventional loan. The separate renovation funds go from a lender to the homeowner’s contractor — who has previously submitted renovation plans in order to get approved — after the work is done.
What kinds of repairs and renovations are eligible?
Several! From small projects such as flooring and painting to big changes like adding an extra room or a garage. Even luxury add-ons like hot tubs, swimming pools, and outdoor kitchens can be eligible. While the number of eligible improvements is too long to list here, it runs from exterior work such as landscaping, to interior bathroom and kitchen remodels, as well as mechanical improvements like electrical and HVAC systems.
What’s not allowed with a HomeStyle loan?
Total teardowns of homes, building second homes on the property, and some improvements which aren’t considered permanent, such as furniture or a mobile storage shed. With manufactured housing, structural changes cannot exceed 50% of the home.
What costs can a HomeStyle loan include?
Beyond the home’s purchase price and the renovation costs, borrowers may be able to include living expenses should they need to reside somewhere else while the home is being worked on. Closing costs, license fees and permits, and reserve money for the project’s contingencies could also get rolled into the loan.
What property types are eligible?
Just about every type. The list of eligible properties includes detached single-family homes, townhomes, condominiums and co-op units, as well as duplexes, triplexes, and quadplexes. Homebuyers can also finance one-unit manufactured homes, one-unit second homes, and one-unit investment homes. And similar to other Fannie Mae mortgages, down payment requirements are usually low, as little as 5% or 3% in some cases.
If you’re thinking about buying a home that could use some work, the Fannie Mae HomeStyle® program may be perfect. Talk to one of the expert loan originators at the Decker Group at First United Bank about this versatile two-in-one loan. You can contact us online or give us a call at (972) 591-3097.