Fund Your Home Renovation Project
Does your home or one you would like to purchase need a little work done? Home improvement or renovation loans give homeowners the additional money needed to fix up their house. These can be home renovation mortgages with included fixer upper funding or in the form of a personal loan. If you’re purchasing a home that needs repairs, there are a lot of renovation loan options.
What is an FHA 203(k) Loan?
An FHA 203(k) loan makes the home renovation process easier by providing the ability to borrow money for your home purchase and renovation costs through one loan. FHA 203(k) loans are endorsed by the federal government, and are great if you require a loan option to buy a home and perform renovations or upgrades to customize as needed. These are a great option for those with credit score lower than 580 and 3.5% down. A 203(k) is considered the best home improvement loans for bad credit.
There are two styles of FHA 203(k) loans, limited (often called “streamline” and standard. They have different rules on the amount that can be borrowed and what is done with the money. Generally, luxury improvements such as a swimming pool will not qualify. Eligible products include improving functionality, eliminating health hazards, roof repairs, making the home more energy efficient, among other things.
Conventional Rehab Loans
For those seeking a rehab mortgage, FHA 203(k) loans are one option, but there are also conventional loans to review. These can be a nice lower cost mortgage with some key benefits for those who can afford to take advantage of them. Conventional loans can be applied to financing a primary residence, a second home, or a rental property. And many people aren’t aware that for only 3% down, you can qualify for a conventional loan. Though 20% down or waiting until you reach 20% equity to avoid mortgage insurance.
How does HomeStyle loan work?
Developed by the Federal National Mortgage Association, the HomeStyle Renovation loan offers an easy way for borrowers to use a first mortgage rather than other costly financing options. This style of mortgage provides three advantages:
- First: Simple financing with straightforward execution
- Second: Flexibility on the upgrades or repairs made to the home
- Third: Affordable option
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