RENOVATION FINANCING

It’s the financing solution that dream homes are made of

You Can Borrow Up To

It’s the financing solution that dream homes are made of.

You’ll hear them called ‘203K mortgages’ although there are actually several variations of this exciting financing solution. All you need to know is that these mortgages give home buyers and home owners the ability to transform a home into what you want it to be.

The Big Ideas:

  • These renovation/rehab mortgages give you the money to purchase a home (or pay-off your current mortgage if you already own the home) PLUS the funds needed to make the repairs you want to make.
  • The loan-to-value, or LTV, is based on the future, after-improved value. That means that you get to borrow more than the home is worth now – an option that isn’t available under any other financing program.
  • There are no projects too small and almost none that are too big (the maximum loan amount is $424,100) so the possibilities are endless.
  • All you need is a home, an idea, an estimate of the costs, and you are ready to get started.

I’m Buying

The FHA 203k Limited

The 203K Limited is perfect for updating a home. You can do most anything with this financing solution except for structural changes and additions.

Designed to be simple, fast, and affordable, it provides up to $35,000 in home renovation funds plus up to 96.50% towards the purchase price of new home.

Download my “Guide to 203k Streamline Rehab Mortgages” to get all the information you need to get started.

The FHA 203k Traditional

The 203K Traditional is a robust financing solution for larger, more involved rehab projects. This program allows you to make major structural changes, put on an addition, raise the roof, and much, much more.

The only limits are your Vision and the maximum loan amount for your County. You’ll get up to 96.50% of the total purchase price plus the renovation costs to make your project a reality.

Download my “Guide to 203k Traditional Rehab Mortgages” to get all the information you need to get started.

The FannieMae HomeStyle

The FannieMae HomeStyle also provides financing for larger, more involved rehab projects. This program allows you to make major structural changes, put on an addition, raise the roof, and much, much more.

The HomeStyle solution offers loan amounts up to $417,000. You’ll get up to 95% of the total purchase price plus the renovation costs to make your project a reality.

Download my “Guide to FannieMae HomeStyle Rehab Mortgages” to get all the information you need to get started.

I’m Fixing

The FHA 203k Limited

The 203K Limited is perfect for updating a home. You can do most anything with this financing solution except for structural changes and additions.

Designed to be simple, fast, and affordable, it provides up to $35,000 in home renovation funds plus up to 96.50% towards the purchase price of new home.

Download my “Guide to 203k Limited Rehab Mortgages” to get all the information you need to get started.

The FHA 203k Traditional

The 203K Traditional is a robust financing solution for larger, more involved rehab projects. This program allows you to make major structural changes, put on an addition, raise the roof, and much, much more.

The only limits are your Vision and the maximum loan amount for your County. You’ll get up to 96.50% of the total purchase price plus the renovation costs to make your project a reality.

Download my “Guide to 203k Traditional Rehab Mortgages” to get all the information you need to get started.

The FannieMae HomeStyle

The FannieMae HomeStyle also provides financing for larger, more involved rehab projects. This program allows you to make major structural changes, put on an addition, raise the roof, and much, much more.

The HomeStyle solution offers loan amounts up to $417,000. You’ll get up to 95% of the total purchase price plus the renovation costs to make your project a reality.

Download my “Guide to FannieMae HomeStyle Rehab Mortgages” to get all the information you need to get started.

I’m Helping

Realtors

Let me acknowledge your reality right from the start:Renovation loans can cause a lot of headaches, missed contract dates, and deals that never close. I get it.

And, yet, they offer the potential to let Buyers realize their dreams; let Sellers sell less-than-perfect homes; and let Realtors close more deals. If they didn’t fulfill that promise at least some of the time, they wouldn’t exist.

I created this website so that all of the stakeholders may access information that will  make the process smoother, faster, better.

Download my Guide to Rehab Mortgages for Real Estate Professionals :

Contractors

Most Contractors tell me that the two biggest challenges they face with renovation projects are:

  • Making sure the homeowner can pay for the work, and
  • Keeping the project scope from creeping out of control

The renovation financing products in this website accomplish both goals. They require that the scope be tightly defined right from the start and they ensure that the funds for the project – including contingency funds for the unanticipated items – are in place.

I created this section of the website to provide access to the forms and information that you’ll need to streamline the process of submitting bids and getting paid.

You may download my Builder Information Kit for each of the renovation financing products below.

What You Can Do:

I’ve done projects as small as repairing a plumbing leak or buying appliances to projects as big a tearing down and building a new home and everything in between. Most of the projects I help with fall into one of these categories:

The FHA Streamline 203(k) program is designed specifically to make upgrades and improvements to existing square-footage in homes. Almost all rehab projects are allowable with the exception of additions and structural alterations. As long as the total cost of repairs doesn’t exceed $35k and the scope fits the allowable items, this may be the most cost-effective solution.

 

·  Remodel Kitchen ·  Electrical upgrade
·  Bathroom remodel ·  Well & Septic
·  New roof ·   Gutters & downspouts
·  HVAC systems ·  Basement refinishing
·  Windows & Doors ·  Waterproofing
·  Flooring ·  Mold abatement
·  Plumbing upgrade ·  Handicap access improvements
·  Insulation ·  New Appliances
·  Siding & Painting ·   Other non-structural repairs

There are also 2 program options designed for more involved projects that either require a larger investment or involve structural alterations and/or additions. The 203k Traditional and the Fannie Mae HomeStyle programs offer a virtually unlimited canvas for your renovation project.

 

·  Tear-down & re-build ·  Additions
·  Dormer roof ·  Garage
·  In-law apartment ·   Remove interior walls
·  Structural repairs ·  Septic and well systems
·  Remodel Kitchen ·  Electrical upgrade
·  Bathroom remodel ·  Well & Septic
·  New roof ·   Gutters & downspouts
·  HVAC systems ·  Basement refinishing
·  Windows & Doors ·  Waterproofing
·  Flooring ·  Mold abatement
·  Plumbing upgrade ·  Handicap access improvements
·  Insulation ·  New Appliances
·  Siding & Painting ·   Other non-structural repairs

How and Why They Work:

I think most people – those who aren’t in the mortgage industry – are perplexed about why these loans are needed in the first place. After all, if you are improving the property, it’s probably going to be worth more than it is today so why wouldn’t a bank just let you borrow some money to fix it up?

The problem is that banks lend on the value they can see – today’s value. That’s just the same as how they use your income today to qualify you – sure, you might get that raise/promotion/bonus but there’s no assurance.

Another issue is that not all home improvement projects are created equal. Some add value such as adding a bedroom or bathroom. Others don’t add much such as finishing basement space or painting interior areas.

The solution to these problems are the FHA 203k and Fannie Mae HomeStyle Rehab Mortgages which change the rulebooks for lending. They do this first by basing the loan on the future, after-improved value of the home. That allows the bank to lend more than the property is currently worth. They rely on professional appraisers who are taught to be able to look at plans and specifications for a home improvement project and translate that into a value once the work has been done. That’s huge.

Of course, banks know that the moment the construction starts, they are facing a new problem: if the contractor doesn’t finish their work, the property is likely worth far less than what you owe on it. Because of that, they have a couple of rules:

  • They don’t allow any work to be performed by the homeowner. It may seem unfair but they don’t want amateurs getting in over their heads. And, for homeowners who are contractors, they want an independent entity to go after in the case of a default rather than the borrower/homeowner.
  • They want the contractor to have an incentive to complete the work. Except for the 203k Streamline, money is only advanced to the contractor for work-in-place. That means that they have to start the project using their own money and get reimbursed along the way. There’s nothing like having skin in the game to incentivize the contractor to do what they’re supposed to do.

Contractors have to be vetted by the lender to make sure that they meet some minimum standards. There are a series of forms that must be provided along with a copy of their contractor license, evidence of insurance, and references. The bank isn’t going to tell you who to use – that’s your job – but they will make sure that they are qualified to perform the work.

Programs At A Glance

Here’s a simple comparison chart showing the types of work that may be performed under each program type.

203k
Streamline
HomeStyle
Streamline
203k
Full
HomeStyle
Full
Occupancy Owner Owner, 2nd, Investor Owner Owner, 2nd, Investor
Max LTV 96.50% 95% 96.50% 95%
Max Repair Amount $35,000 $15,000 No limit 50% of After-Improved Value
Min Repair Amount None None $5,000 None
PMI/MIP Always >80% LTV Always >80% LTV
Borrower-Contractor Relationship No Allowed No Allowed
Type of Repair Allowed Non-Structural Non-Structural All Types All Types
Outbuildings No No Yes No
Pools No No $1,500 for repairs only Yes
Building Additions No No Yes Yes
Mold/Lead/Environmental Yes Yes Yes Yes
Foundation Work No No Yes Yes
Tear-Down & Rebuild No No Yes No

Step-By-Step Guide

Here’s a simple action list for the steps a home buyer or homeowner will follow in order to obtain a renovation loan.

  • Identify a property and scope of work
  • Obtain a rough estimate from the contractor(s)
  • Meet with me to determine the amount of financing required
  • Negotiate Purchase contract with seller (if purchasing)
  • Mortgage application completed and submitted
  • HUD-Consultant report obtained, if needed or recommended
  • Obtain complete contractor bid package from your preferred contractor(s)
  • Appraisal completed
  • Loan conditions cleared
  • Closing occurs!
  • Renovation funding commences (based on loan type)

For Contractors

Welcome! If you are reading this, it means you will be helping a valued client of ours rehab their current or future home.  I have put this section together to make it easier for you, for our shared client, and for the lender. If you would follow the steps contained in the appropriate Contractor Bid Package below, it will ensure that I am able to get the financing in place quickly and without interrupting your busy schedule to ask for additional documents.

You will find each of the forms you need to support your bid in the document package. If you are uncertain which package you should be downloading and completing, please contact me so that I may guide you. As always, I encourage you to reach out to me if you need help completing your package or have questions about the process.

“The Divorced, Debt-ridden Dad Who Wanted the Best for His Kids”

“The Divorced, Debt-ridden Dad Who Wanted the Best for His Kids”

When Jeff was referred to me in late Summer of 2015, he wanted to purchase a home in the same town as his ex-wife so that he wouldn’t disrupt his kids’ lives. He’d tried going to a regular bank, however, with his other debt and child support obligations, they wouldn’t...

It’s No Laughing Matter!

It’s No Laughing Matter!

You know that old Rodney Dangerfield joke that went “Small? Where I grew up, the house was so small even the mice were stoop-shouldered!” Well, that’s Ryan & Melissa’s story… When Ryan and Melissa first came to me in the Summer of 2015, they were living in the...

Pin It on Pinterest

Share This