Renovation Loans

Transform Your Home Dreams into Reality with Renovation Loans

Renovate, remodel, or make repairs with ease. Our renovation loans offer the financial flexibility you need to bring your home improvement visions to life. Learn how you can get started.

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Renovation loans are essential for homeowners who wish to transform their property into a dream home. Here, we’ll explore three popular options: the FHA 203(k), FNMA HomeStyle, and FHLMC Choice Renovation loans.

Renovation Loans at a Glance:

Minimum Credit Score580
Minimum Down Payment3.5%
Max Loan Amount$726,200
Max Debt-to-Income (DTI)56.99%
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Table of contents

FHA 203(k)

Overview: The FHA 203(k) loan is backed by the Federal Housing Administration. Choose this renovation loan option if you’re looking for flexibility in financing both the purchase of a home and the renovation costs.

Benefits:

  • Lower Credit Score Requirement: Typically, a lower credit score is acceptable.
  • Higher Debt-to-Income Ratio Allowed: Offers more room for higher debts relative to income.
  • Flexible Renovation Options: Most types of repairs and improvements are eligible. However, luxury items, like swimming pools, are ineligible.

Drawbacks:

  • Mortgage Insurance Requirement: Borrowers must pay mortgage insurance, adding to the overall cost.
  • Stricter Contractor Guidelines: Additionally, contractors must meet specific criteria, potentially limiting your options.

FNMA HomeStyle Renovation Loan

Overview: The FNMA HomeStyle loan is a conventional program by Fannie Mae. Find a balance of flexibility and affordability with this renovation loan option.

Benefits:

  • Broad Renovation Options: It allows almost any type of renovation, including luxury items like pools.
  • Potentially Lower Interest Rates: Often provides competitive interest rates.
  • No Mortgage Insurance Requirement: If the down payment is above 20%.

Drawbacks:

  • Stricter Credit Requirements: You may need a higher credit score.
  • Detailed Documentation Required: Extensive paperwork may slow down the process.

FHLMC Choice Renovation Loan

Overview: The FHLMC Choice Renovation loan is backed by Freddie Mac. It stands out for accommodating both extensive remodels and disaster repairs.

Benefits:

  • Flexible Renovation Types: Includes disaster recovery and resilience upgrades to protect from natural disasters. Additionally, you can finance energy efficiency upgrades.
  • Single-Closing Option: Conveniently, the purchase and renovation costs can be combined.
  • Potential for No Mortgage Insurance: Conditions apply.

Drawbacks:

  • Higher Credit Score Requirements: Similar to FNMA HomeStyle, make sure your credit score is on the higher side.
  • Varied Interest Rates: Interest rates can vary based on different factors.

How to Apply for a Renovation Loan

Apply Online

  1. Visit the website: Go to the online mortgage application portal at Amres.com.
  2. Complete the application: Answer some questions about your homeownership goals and personal information.
  3. Gather Documentation: Next, prepare necessary financial documents, such as asset statements and tax returns.
  4. Builder and Project Review: We will vet the builder you want to use and review the builder’s background information. We will review the project plans and specifications for completeness and feasibility.
  5. Loan Processing and Approval: Amres will process the loan, conduct the appraisal, and provide a decision on approval.
  6. Closing: Lastly, after approval, you’ll proceed to closing. There, you’ll finalize the loan and become the proud owner of your new home.

Apply over the phone

  1. Contact an Amres Loan Officer: Start by connecting with an Amres loan officer to discuss your needs and options.
  2. Gather Documentation: Next, prepare necessary financial documents, such as asset statements and tax returns.
  3. Complete Application: Your loan officer will guide you through the application process, making sure all details are accurately provided.
  4. Builder and Project Review: We will vet the builder you want to use and review the builder’s background information. We will review the project plans and specifications for completeness and feasibility.
  5. Loan Processing and Approval: Amres will process the loan, conduct the appraisal, and provide a decision on approval.
  6. Closing: Lastly, after approval, you’ll proceed to closing. There, you’ll finalize the loan and become the proud owner of your new home.

Conclusion

Choosing the right renovation loan depends on your unique needs, budget, and the type of project you have in mind. With the FHA 203(k), flexibility is a strong point, but additional costs like mortgage insurance might apply. On the other hand, the FNMA HomeStyle and FHLMC Choice Renovation offer different benefits such as potential for no mortgage insurance and varied renovation options.

To discover the best option for your situation, consult with an Amres loan officer today. We can guide you through the process and ensure a smooth journey towards turning your house into your dream home.