HomeStyle Renovation Loans and Eligibility for 2024
By: Marcos Zambrano
Updated on: October 13, 2024
Understanding the Fannie Mae HomeStyle Renovation loan
One of the most frequent requests that we receive here at Andes Mortgage is about our HomeStyle Renovation Loan.
In this article, I’m going to give you an in-depth analysis about this program and how it could be a great solution for your home renovation needs.
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What is a HomeStyle Renovation Loan?
The HomeStyle renovation loan is a type of a conventional mortgage that allows borrowers to either purchase a property or refinance their existing home while including the cost of its renovation in the total loan amount.
This program can be very appealing for those looking to buy a “fixer-upper”, a property in need of TLC or for homeowners who want to make minor to major renovations and upgrades to their current residence or even an investment property.
Key Features of HomeStyle Renovation Loans
One of the standout features of the HomeStyle Renovation Loan is its flexibility.
It can be used for a wide range of projects, from minor repairs like replacing worn-out flooring or painting walls to major renovations such as kitchen remodels, room additions, or even adding a new story to a house.
Also, this loan program covers both structural and non-structural improvements, which means you can also use it for energy-efficient upgrades or modernizing outdated amenities. With a HomeStyle mortgage you can even do amenities such as pools, landscaping, or even build an ADU, which are not allowed by other renovation loans.
Eligibility Requirements for a HomeStyle loan
To qualify for a HomeStyle Renovation Loan, borrowers must meet the following criteria:
Credit Score: A minimum credit score of 640 is typically required. However, a score of at least 680 is recommended.
Loan-to-Value (LTV) Ratio: Depending on the specifics of the loan, the LTV ratio can range from 75% to 97%. More on this later.
Debt-to-Income Ratio: Generally, a debt-to-income ratio of 45% or lower is preferred.
Income Verification: Borrowers need to provide proof of stable income. This can include pay stubs, tax returns, or other financial documents.
Property Type: Eligible property types include single-family homes, multifamily residences (up to four units), condos, and manufactured homes.
Plans and Costs: Borrowers must submit detailed plans and cost estimates for the proposed renovation projects.
Licensed Contractors: Renovations must generally be performed by licensed and insured contractors.
Occupancy: The property can be a primary residence, second home, or investment property.
Why Consider a HomeStyle Renovation Loan?
Benefits of Using HomeStyle Loans
HomeStyle loans can finance a wide range of renovations, from major structural repairs to cosmetic upgrades.
The key feature of this loan is that the renovation costs are bundled with the mortgage. So you will only have one loan on your home and one monthly payment.
Customizing Your Home
A HomeStyle loan offers homebuyers and homeowners the flexibility to design a home the way they want.
Increasing Home Value
Investing in renovations can significantly increase the market value of a home. Updates such as kitchens and bathrooms or finishing a basement can often yield the best return on investment.
Minimum Down Payment for a HomeStyle Loan
| First-time homebuyer | Repeat homebuyer | Second Home | Investment | |
|---|---|---|---|---|
| Minimum Down Payment | 3% | 5% | 20% | 20% |
| Multi-Family (2-4 Units) | 5% | 5% | 25% | 25% |
HomeStyle vs. FHA 203(k) Loans
While both HomeStyle and FHA 203(k) loans offer financing for home renovations, there are several key differences between the two.
HomeStyle loans are conventional mortgages backed by Fannie Mae and thus, may require a higher credit score, lower debt to income ratios, etc., to qualify. Meanwhile, FHA 203(k) loans are FHA loans and are typically easier to qualify for.
Also, HomeStyle loans may allow for certain upgrades that FHA 203(k) loans do not. For example, with a HomeStyle loan, you can build a pool or even do landscaping whereas FHA 203(k) loans do not allow for. HomeStyle loans may also allow you to get a higher loan amount to fund your project, while FHA loan amounts are typically lower than the maximum conventional loan limits.
Lastly, FHA 203(k) loans require a HUD consultant to oversee the renovation process and ensure that all repairs are completed, while HomeStyle loans do not require this.
Start now on your HomeStyle Loan
A HomeStyle loan can be a great option for those looking to purchase or renovate a home.
You are going to have a lot of flexibility and ability to increase the value of your home, while turning it into the ideal place you want.
If you are considering buying a fixer-upper or planning to do some major renovations on your current home, it is important to research and compare different loan options. Both HomeStyle and FHA 203(k) loans offer financing for home improvements, but they have distinct differences that may make one more suitable for your specific project.
The HomeStyle loan is truly is a great program that I wish more people knew about and here at Andes Mortgage, we help our clients with these types of loans.
If you want to find out whether a HomeStyle loan is right for you, contact us today and speak with one of our experienced loan officers. Give us a call at 770-740-4050 and get further information about this program or any other renovation program.
Frequently asked questions about HomeStyle loans
Can I use a HomeStyle Loan for investment properties?
Yes. You can do a HomeStyle loan for investment single family, condos and multifamily up to 4 units.
Are there any income limits for HomeStyle loans?
No, there are no income limits for this type of loan. However, your income will bet aken into consideration when determining your eligibility and loan amount.
Is it possible to do the renovations myself with a HomeStyle loan?
No, you’ll need at least one General Contractor.
How long does it take to close on a HomeStyle loan?
Typically, these loans take about 21-30 days to close for both home purchase and refinances.
