Renovation Loans

About Renovation Loans

With low inventory on the market, buyers may have to take an existing home and make it into their dream home. With a renovation loan, buyers can purchase a home and get money for renovations at the same time.

Renovation loans are a versatile financing option that combines the cost of purchasing or refinancing a home with the funds needed for repairs or upgrades. These loans are perfect for buyers interested in fixer-uppers or homeowners looking to enhance their current property. Renovation loans streamline the process by bundling home improvement costs into a single mortgage, saving time and money while allowing borrowers to create their dream home.

Renovation loans can use FHA, Conventional, VA or USDA program guidelines.

Get more information about the home buying process

Some Key Renovation Loan Characteristics

Combined Financing: Covers the home’s purchase or refinance cost and renovation expenses in one loan.
Flexible Use of Funds: Suitable for a range of projects, from minor cosmetic upgrades to major structural repairs.
Single Monthly Payment: Simplifies finances by consolidating mortgage and renovation costs.
Increased Property Value: Allows homeowners to invest in improvements that may boost the home’s market value.
Variety of Loan Types: Options include FHA 203(k), Fannie Mae HomeStyle®, and other lender-specific programs.
Draw-Based Funding: Funds for renovations are typically disbursed in stages as work is completed.

Considerations for Borrowers

Project Planning: A detailed renovation plan and cost estimate from a licensed contractor are typically required.
Appraisal Requirements: The loan amount is based on the property’s expected value after renovations.
Construction Timeline: Renovations must be completed within a specified period, usually 6-12 months.
Loan Costs: Includes standard mortgage costs plus any additional fees for managing renovation funds.
Borrower Commitment: Requires careful planning and communication with contractors to ensure the project stays on budget and schedule.

Renovation Loan Qualifying

Renovation loans follow the guidelines of the underlying loan program:

Credit Score: Minimum credit score requirements vary by loan type but are generally in line with traditional mortgages.
Down Payment: Down payment requirements can range from 3% to 5% or more, depending on the loan program.
Debt-to-Income Ratio (DTI): Lenders will assess DTI to ensure the borrower can handle the combined loan payment.
Employment and Income: Steady income and employment history are essential for approval.
Property Type: Renovation loans can be used for single-family homes, condos, and multi-unit properties, depending on the loan program.

Renovation loans provide a practical solution for turning a property into the perfect home. Whether you’re buying a fixer-upper or upgrading your current home, we’re here to guide you through the process. Contact us today to learn more and get started!Reach out to our team at (210) 987-8943. We are happy to answer your questions and would love to work with you!

This is not an offer to enter into an agreement. Not all customers will qualify. Information, rates and programs are subject to change without notice. All products are subject to credit and property approval. Other restrictions and limitations may apply.

Corporate | NMLS ID NMLS# 1660690 | Corporate Address : 3100 W Ray Road #201 Office #209 Chandler, AZ 85226

https://nexamortgage.com