When you decide to purchase a home, it’s important to get pre-approved so you know the loan amount and home price you can afford based on your individual finances. You may already have an idea of the type of home you’re interested in, as well as the location where you want to live. The next step is to select a Real Estate Broker and begin your home search for homes that fit your criteria for style, location and price. But what if after viewing homes with your Real Estate Broker, you’ve realized the only homes that fit your needs (and wants) are out of your price range or desired neighborhood?
Many established neighborhoods have homes that were built well but their style is outdated. If you find an outdated home in your desired location, try to visualize that home after a renovation. A renovation loan may be the best option for you, as they allow you to purchase the home you like, in the neighborhood you desire, for a price you can afford, with just one closing and one loan. Perhaps the cost of renovation plus acquisition will be less than buying an updated alternative.
There are several renovation loan programs you can choose from, including 203k Limited, 203k Standard, and HomeStyle. Your Real Estate Broker and Loan Officer can help you calculate and determine the best option for you.
- 203k Limited gives you up to $35,000 toward cosmetic repairs, improvements or upgrades with a single mortgage. Upgrades must be non-structural home improvements. Total repair amount, including all eligible fees, cannot exceed $35,000. You must work with a General Contractor (licensed as required in the state/municipality of the home); DIY projects are ineligible.
- 203k allows you to completely transform your home, whether that means foundation repairs and a new roof or a beautiful modern kitchen, hardwood floors, and the addition of a master suite. Total renovation costs must be a minimum of $5,000; amount borrowed must be within FHA loan limits which vary by county. Work must be completed within 6 months and you must work with a General Contractor.
- HomeStyle Renovation allows you to customize a home to your liking or make needed repairs, as long as they are permanent to the property and add value. With a HomeStyle Renovation, you can combine your purchase or refinance with home improvement financing and only pay a single mortgage payment each month. You must use approved, licensed professionals to complete the renovation work. There is no minimum renovation amount, but minimum down payment is 5%.
Contact your First Centennial Mortgage Loan Officer to learn more about these renovation programs and find out if they’re right for you.