I’m thrilled to announce my partnership with Kelly Scovanner, mortgage lender at Guaranteed Rate Affinity, to specialize in Renovation Loans! Renovation loans offer a range of benefits that make them an attractive option for homebuyers. By combining the cost of the home purchase and the renovation into a single loan with one monthly payment, they simplify the financing process and often reduce overall costs, including interest rates and closing fees. These loans provide the flexibility to make essential repairs or aesthetic upgrades immediately, allowing you to tailor the home to your tastes and needs from the start. Additionally, investing in renovations can significantly boost your home's market value and help build equity faster, making a renovation loan not just a financing tool, but a smart long-term investment.
TWO TYPES OF RENO LOANS:
The Section 203(k) Rehabilitation Mortgage Insurance Program is a valuable FHA-backed solution designed to facilitate the purchase or refinancing and rehabilitation of homes that are at least one year old. By insuring a single, long-term fixed or adjustable-rate loan, 203(k) simplifies the process for both borrowers and lenders, covering the cost of both acquisition and renovation. A portion of the loan proceeds is used to buy the home, while the remaining funds are held in escrow and released as the rehabilitation work is completed. This program combines the affordability and flexibility of FHA-insured financing with lender protections, as it allows the mortgage to be insured before the property is fully restored and appraised. Additionally, 203(k) supports sustainable development by enabling the financing of energy-efficient improvements, giving lenders a unique opportunity to contribute to climate-conscious housing solutions.
A conventional renovation loan offers homeowners and investors a cost-effective and streamlined way to finance property improvements by bundling renovation costs into a primary mortgage. Options like Fannie Mae’s HomeStyle Renovation loan provide flexibility with fixed- or adjustable-rate terms and can be combined with other Fannie Mae products. This loan allows borrowers to fund upgrades up to 75% of the lesser of the purchase price plus renovation costs or the post-renovation appraised value, covering both interior and exterior enhancements such as landscaping, patios, and pools. Similarly, Freddie Mac’s CHOICERenovation loan extends eligibility to second homes, multi-unit properties, and investment real estate, and supports lower down payments—starting at just 3.5%—as well as more lenient credit and debt-to-income requirements. Borrowers may even receive down payment credits for completing repairs before closing. Both programs offer an alternative to high-interest financing and may require additional appraisals to confirm improvements meet projected post-renovation values.
Let’s make your homeownership dreams a reality!
