Home renovation loans, also known as Home Improvement loans, are a way for homeowners to finance their fixer-uppers or older homes that need updating. These loans cover the entire renovation project – and yet many potential borrowers don’t know that they are an option – let alone how they work.
Whether it’s a kitchen or bathroom renovation project, adding on a home office, or installing a new roof, major home improvements require a sound budget. Home renovation loans provide funding for renovating, remodeling, and repairing a home. It can be thought of as a mortgage that includes extra money for home improvements.
Borrowers who may benefit from a home renovation loan are contemplating home improvement ideas.
- Are you looking to modernize a kitchen or bathroom(s)?
- Are you looking to remodel a home to fit your lifestyle and family needs?
- Are you wanting to add one or more rooms to the house?
- Are you contemplating the purchase of a home with a low asking price but in need of serious work?
Additionally, these types of loans give more homeowners and/or borrowers more control over building equity. By making improvements and substantial upgrades, these projects will improve the value of the property in the long run.
Some types of home renovation loans available include conventional renovation loans, FHA renovation loans, USDA renovation loans, and VA renovation loans.
Conventional Renovation Loans at a glance:
- Low fixed rates that are locked prior to closing and guaranteed.
- PITI (principal, interest, taxes, and insurance) payments are due during the renovation period.
- Closing costs can be rolled into the loan. Ask us how.
- 97% financing available
- 620 minimum FICO score required
FHA Renovation Loans at a glance:
- Low fixed rates that are locked prior to closing and guaranteed.
- PITI (principal, interest, taxes, and insurance) payments are due during the renovation period.
- Closing costs can be rolled into the loan. Ask us how.
- Up to 96.5% financing available
- 620 minimum FICO score required
VA Renovation Loans at a glance:
- Low fixed rates that are locked prior to closing and guaranteed.
- PITI payments are due during the renovation period.
- Closing costs can be rolled into the loan. Ask us how.
- 100% financing available (90% on refinance transactions)
- 620 minimum FICO required
- Repairs must be non-structural
USDA Renovation Loans at a glance:
- Low fixed rates that are locked prior to closing and guaranteed.
- PITI payments are due during the renovation period.
- Closing costs can be rolled into the loan.
- 100% financing available
- 620 minimum FICO score required
While they are similar in that banks and other approved lenders issue them, they differ greatly in type and who qualifies.
The Federal Housing Administration insures FHA-Insured Loans. Though the FHA does not have income requirements, borrowers need to prove their income, and there are limits on loan amounts.
VA Loans are available to veterans who have served or are currently serving in the armed forces, reservist/national guard members, or an eligible surviving spouse. The Department of Veteran Affairs guarantees these types of loans. Borrowers must also have a Certificate of Eligibility (COE). The COE proves that the applicant officially meets the minimum military service requirements. This type of loan is only available through certain VA-approved lenders.
The U.S. Department of Agriculture (USDA) loans are for homes in rural areas, though many other suburban communities and locations are also able to qualify. The loan is subsidized through the USDA. Borrowers must demonstrate stable income and the ability to make payments without incident for at least 12 months based on assets, savings, and income.
HomeLander Mortgage will be there every step of the way to help borrowers determine which type of renovation loan is appropriate to their budget, needs, and qualifications. Schedule a call to begin the process at www.homelandermortgage.com
