If you have ever thought about buying a home and fixing it up to make it yours, a renovation loan or home improvement loan could be the mortgage for you.
What is a Renovation Loan?
Available for buying or refinancing a home, a renovation loan is a mortgage loan where additional funds to renovate a home are rolled into one loan. The new loan is based on the home’s estimated value after the renovations are complete, allowing you to borrow more than a traditional home equity loan.
These loans offer several advantages over some traditional mortgage loans:
- Avoid depleting savings or maxing out credit cards
- Build equity faster by increasing the value of the home
- Low interest rate and one monthly payment
There’s a lot to think about when buying a house – and it’s normal to have questions, especially if you are a first time home buyer.
Maybe you want to change your term or lower your payment or payoff your loan faster. A rate and term mortgage could be your key to both.
Finding a great home loan involves careful consideration of your needs, finances and history. We are here to guide you.
Frequently Asked Questions
A renovation loan works the same way as a traditional loan but adds the renovation costs and requirements.  Most renovation loans require that you live in the home as your primary residence and have limits on the amount of money you can borrow as well as what kind of improvements you can use it for. If the renovation project will not be used as a primary residence, take a look at our Fix & Flip program designed for investors.
There are several renovation loan programs available for owner-occupied properties, these include:
FHA 203k LoanÂ
Insured by the Federal Housing Administration, FHA 203k loans are a good choice for buyers who need a low down payment or have less than stellar credit scores. Available in Limited and Standard options, they can be used to purchase a one-to-four-unit home, condominium, or a mobile or manufactured home.
Fannie Mae HomeStyle Renovation Loan
This loan is a great choice for homeowners with good credit and a sizable down payment. Renovation funds can be used for repairs, remodeling or energy efficient upgrades for primary, vacation and rental properties.
Freddie Mac CHOICE Renovation & CHOICE Renovation Express
Similar to the FannieMae Homestyle, CHOICE Renovation is Freddie Mac’s renovation mortgage program. CHOICE is available in two versions depending on the scope of the renovations.
Cash-Out Mortgage Refinances
One of the most common choices for financing home improvements, a cash-out mortgage lets you refinance your home for more than you owe. You can then draw on the extra money to pay for your renovations. Offering a fixed interest rate, a cash-out refinance loan can lower your interest rate and/or your monthly payments.
Home Equity Loans & Lines of Credit
Access the money you’ve invested in your home while you’re still living in it. Home equity loans and lines of credit are personal loans that use your home as collateral. Often used to finance college tuition, debt consolidation, or new business ventures as well as home improvements, home equity loans let you borrow up to 90% of your home’s market value minus the amount you owe on the mortgage. It can be a smart choice if you have a substantial amount of equity built into your home and want to borrow a large lump sum for bigger renovation projects.
The qualifying guidelines for a renovation loan are the same guidelines for the specific loan program.Â
We have the experience, the social track record, and access to the right resources to get loans done.
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Whether you are buying a new home, getting cash from your home’s equity, seeking a more affordable payment, or want to pay off your home loan sooner, our mortgage professionals explain your options simply and clearly — and offer you competitive rates and terms to help you save.
Our mission is to help give you the smartest path for homeownership, regardless of your starting point.
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1. Complete Your Application
Applicants can start online or over the phone to determine affordability.
2. Become a Certified Home Buyer
Once the loan application is received, your loan officer will review your loan options. Â
3. Time for Processing
A processor verifies information, orders the appraisal, title report, and homeowners insurance.Â
4. Closing on Your New Home
Once the loan is cleared to close, the loan documents are sent to the title company for signing.Â