Whether buying a new home or refinancing your current one, you can use Fannie Mae’s HomeStyle® program to cover repairs and improvements. Solar panels. A swimming pool. A new kitchen, and so much more! There are very few limitations on the renovations you can do.

How a Renovation Loan Works

There’s no need for a second mortgage. No multiple closing costs. Unlike conventional mortgages, this fixed-rate renovation program lets you finance a home for more than it’s worth, basing the loan amount on the projected property value after the improvements. You can renovate the home you live in, your second home, and investment properties.

When buying a home, it’s smart to start with pre-approval. While not required, loan pre-approval is the best way to understand your price point, factoring in the home’s purchase price and the cost of planned renovations into the total amount borrowed.

Fixer-uppers are welcome. The program doesn’t allow total teardowns, but the home doesn’t have to be habitable to qualify. In this case, you can live elsewhere, enjoying six months of renovation financing during construction work.

Planning Your Renovations

You need to get with professionals, such as certified contractors or renovation consultants, who are on board with the program. Your lender can help you there! Contractors often get 50% of the cost of materials upfront and full payment after the work is done.

What work can you do yourself? With lender approval, you may do some DIY renovations. The program limits this to 10% of the “as completed” value of the property.

Before work begins, an appraiser evaluates the renovation plans. After the work is done, the appraiser determines how much value these changes add to the home.

Bang for your Renovation Buck

Some home renovations can pay for themselves in recouped costs.

  • Garage door replacement. Simple, low-cost, and comes with a whopping 194% cost-recoup rate.
  • Stone veneer. Beautifying your home’s facade with natural stone delivers a 153% return on investment.
  • Moderate kitchen remodels. Why change everything? Upgrades with new cabinets, countertops, and appliances offer 96% cost recovery.
  • Deck addition. Creating outdoor living space doesn’t just improve your living experience. The renovation has an impressive return on investment of 83%.

You could be a few renovations away from living in your dream home. To talk about the possibility, connect with a loan expert at the Decker Group online or call us at (972) 591-3097.