Can a FHA 203k or Fannie Mae Homestyles (conventional) renovation loan be used to Refinance and Renovate a property? Yes! A homeowner can refinance the current loan into a new loan AND include the cost of updates, repairs and improvements. The new loan appraisal would be a “Subject-to” appraisal like all renovation loans meaning the homeowner will get the new value BEFORE the work is completed. In addition, if it’s a FHA 203k loan, the homeowner could get up to 110% of new appraised value – a 10% buffer!
- Are there renovation loans for investors or second homes? Yes! Both Fannie Mae HomePath Renovation and the standard Fannie Mae Homestyles renovation loans can be used to purchase and repair investment properties. FHA 203k is for Primary homes only.
HomePath Renovation – Can only be used on eligible Fannie Mae REO properties. Minimum required down payment is 15% for investors.
HomeStyles Renovation – Can be used on ANY property. Minimum down payment is 20%.
When is the appraisal ordered on a FHA 203k or HomePath Renovation loan? The appraisal is not ordered until the detailed scope of repairs (estimates) is complete and signed by both parties. The appraisal is then done “subject-to” the forthcoming repairs & improvements meaning the value is given ahead of time but the work is not started until after closing. There is NO “as-is” appraisal on renovation purchase loan.
Can a buyer get homeowners insurance on a property which needs repairs and/or has outdated roof, electrical and plumbing? YES! There are two different types of insurance that can be applied. Standard homeowners insurance where the policy is issued since they know the work is being completed after closing. In addition, we often see Builders Risk insurance which is for properties which are not occupied thus no contents are covered. Either way, we have a soution so please reach out if you have insurance challenges