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    Email: joe@joemetzler.com

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  • HomeStyle Renovation Loan

    Found a diamond in the rough home in need of some tender loving care? You can both buy and get the money needed to renovate the home all in own easy loan with the Homestyle Renovation Loan from Cambria Mortgage.

    The Fannie Mae Homestyle rehab loan, and the older FHA 203k rehab loan are extremely similar, and a lot of the information on this page applies to both products.

    The Homestyle Renovation is a conventional loan, while the FHA 203k loan is a government backed loan. The two biggest differences we see are:

    1. FHA is a bit more pickey on the condition of a home, and what repairs might be mandatory compared to the conventional loan. For example. On a home built before 1978, the FHA loan will require all peeling paint be included in the repair costs, while the conventional loan doesn’t care.like peeling paint, are not mandatory repairs on a conventional loan.
    2. Another big difference is that the Fannie Mae Homestyle Renovation loan can potentially allow for a much bigger loan size than the FHA 203k.

    HomeStyle is not automatically better than a 203k loan, and a 203k loan is not automatically better than a Homestyle rehab loan.

    Talk to one of our experienced rehab loan experts to determine which rehab loan may be better in your individual situation.

  • The HomeStyle Renovation program closes JUST ONE time. It is your long-term permanent form of financing. It is NOT a short term construction loan. The program allows from minor cosmetic repairs, all the way up to major remodels, major damage repair, storm damage, etc.

    This loan can help with new paint (in/out), new siding, new roof, new flooring, new appliances, HVAC repair/replacement, electrical & plumbing repair & upgrades, new windows, decks, porches, patios, minor kitchen remodels, & more.

    Any type of renovation or repair is eligible, as long as it is permanently affixed to the property. Renovations should be completed within a twelve-month period. Luxury improvements, like pools are not allowed.

    For repairs under $50,000, you only need to work with your contractor. Repairs OVER $50.000 REQUIRE you work with an independent HUD Consultant to draw up detained repair plans. Talk to one of our rehab loan experts on how to find the required HUD Consultant.

    We suggest using a general contractor with a strong track record to ensure that your work is done & done right, and that hopefully has experience with FHA 203k or HomeStyle Renovation loans. There is no special list or requirements for the contractor, and we do not give contractor referrals. You can have up to three contractors, but we strongly suggest you use just one.

    Rehab Loan Eligible Borrowers:
    • Owner Occupants - Purchase - Refinance
    • Investors OK on Fannie Mae Homestyle
    Loan Terms Available:
    • 30 or 15 year fixed rates
    • One year ARMS
    Eligible Properties:
    • Single family dwellings
    • Condominium
    • Townhouse
    • 1-4 Unit buildings
    Allowed Repairs:
    • Repair/replace roofs, gutters, and downspouts
    • Repair/replace/upgrade existing HVAC systems
    • Repair/replace/upgrade plumbing and electrical systems
    • Repair/replace/upgrade flooring and carpets
    • Minor remodeling, such as kitchens and bath (which does NOT involve structural repairs)
    • Painting - Both interior and exterior
    • Weatherization, including storm windows and doors, insulation, weather stripping
    • Accessibility improvements for persons with disabilities
    • Lead based paint abatement
    • Basement finishing and remodeling (which does not involve structural repairs)
    • Septic system replacement / upgrade
    • Wells
    • Mold abatement / remediation
    • Major rehabilitation or major remodeling - such as tear down or relocation of walls
    • New construction - like room additions
    • Repair of structural damage
    • Any repairs requiring drawings or architectural exhibits

    Calculating The Maximum Mortgage Amount

    For purchase transactions, loan-to-value (LTV) ratio is based on the lesser of:

    1. purchase price and cost of renovation, or
    2. the “as completed” appraised value.

    For refinance transactions, the LTV ratio is determined by dividing the original loan amount by the “as completed” appraised value of the property. MH is eligible with HomeStyle Renovation, with the eligible renovation funds capped at the lesser of $50,000 or 50% of the “as completed” appraised value.  Borrower may not receive cash back aat closing in any amount (Fannie Mae standard limited cash-out refinance of 2% or $2,000, whichever is less, is NOT PERMITTED for this product).

    Maximum Loan-to-Value

    The following are maximum LTV/CLTV/HCLTV ratios for purchase or LCOR when HomeStyle Renovation mortgages are underwritten with DU* (note that borrowers can also qualify for up to 105% CLTV with eligible Community Seconds®):

    • One-unit principal residence to 97% LTV/CLTV/HCLTV with FRM; 95% with ARM (Note: For LTVs > 95%, on purchase transactions, the borrower must be a first-time home buyer unless combined with HomeReady; for LCOR transactions, the loan must be owned or securitized by Fannie Mae.)
    • Two-unit principal residence to 85% LTV/CLTV/HCLTV with FRM/ARM
    • Three- and four-unit principal residence to 75% LTV/CLTV/HCLTV with FRM/ARM
    • One-unit second homes to 90% LTV/CLTV/HCLTV with FRM/ARM
    • MH LTV/CLTV/HCLTV ratios principal residence to 95% FRM/ARM; second homes to 90% FRM/ARM (Note: 105% CLTV is not permitted with Community Seconds) 

    One-unit investment properties:

    • Purchase up to 85% LTV/CLTV/HCLTV with FRM/ARM
    • LCOR up to 75% LTV/CLTV/HCLTV with FRM/ARM

    Contractors

    • Borrower must choose his or her own contractor to perform the renovation.
    • Lender must review the contractor hired by the borrower to determine if they are adequately qualified and experienced for the work being performed. The Contractor Profile Report (Form 1202) can be used to assist the lender in making this determination.
    • Borrowers must have a construction contract with their contractor. Fannie Mae has a model Construction Contract (Form 3734) that may be used to document the construction contract between the borrower and the contractor.
    • Plans and specifications must be prepared by a registered, licensed, or certified general contractor, renovation consultant, or architect. The plans and specifications should fully describe all work to be done and provide an indication of when various jobs or stages of completion will be scheduled (including both the start and job completion dates).

    Do It Yourself Work

    While technically an small amount of the under not exceeding 10% is allowed by Fannie Mae, most lender DO NOT ALLOW you to complete any of the work.

    Renovation costs, payouts, and Contingency reserves

    Lender may advance funds of up to 50% of the cost of materials any time after closing of the loan to secure necessary supplies for the project. Renovation costs may include:

    • Labor and materials.
    • Soft costs (architect fees, permits, licenses).
    • Contingency reserve (up to related to the cost of labor, materials, and soft costs for unforeseen extra costs in the renovation). The contingency reserve is optional unless the property is a 2- to 4-unit home.
    • A payment reserve of up to six months PITIA is permitted when the borrower must vacate the property during renovation. The amount can be financed in the loan amount if the value will support such financing. The reserve is allowed only for the period in which the property is uninhabitable due to the renovations. (If monthly HOA fees are included in the renovation escrow account, the servicer must pay them on behalf of the borrower.)
    • A contingency reserve of 10% of the hard and soft renovation costs is required for two- to four-unit properties; the contingency reserve may be financed or it may be funded separately by the borrower