There are four basic types of renovation loans: Shane Day
Mortgage Specialist Shane Day
Did you know:
•One loan can cover the purchase price and renovation costs?
•The loan amount is based on the value after improvement?
•Zero down renovations loans are available?
*streamline 203 (k)
*regular 203 (k)
*conventional renovation and
*remodel-to-permanent financing.
Mortgage Specialist
303-462-1590 Tel
303-232-6919 Fax
mailto:johnathon.s.day@wellsfargo.com
The streamline 203(k) is an FHA loan, backed by the government which requires a 3% down payment if the borrower is purchasing the home. Renovation funds are limited to between $5,000 and $15,000 and can be used for cosmetic changes such as painting, new carpeting, a new roof or appliance upgrades. This loan does not required a detailed work write-up by HUD consultant. The borrower simply needs a cost estimate or bid from a contractor or a home improvement business. The streamline 203(k) allows the contractor to get half of the renovation funds upfront.
A regular 203(k) can be used to finance more substantial structural improvements, including foundation repairs, room additions and replacement of septic systems. This type of loan is for work that costs at least $5,000 and lends up to local FHA loan limits. This loan requires only 3% down. However, FHA 203(k) financing allows down payment assistance programs that can gift the borrower up to 100% down payment and closing costs, allowing the borrower to purchase a home with little to no money.
A conventional loan program has a limit of $359, 650 with no restrictions on the type of work to be done. It can be used to finance room additions, a new pool or spa or landscaping. This loan can be used for a wide variety of improvements as long as the borrower has equity in the property.
The remodel-to-permanent financing program provides up to $2 million to existing property owners, to be used for any type of improvement. A 5% minimum down payment (or 10% of the value of the property) is required. Generally, the more money borrowed, the greater the down payment required.
I enjoy helping clients find just the right loan for their home buying situation. Please feel free to call me to discuss your home financing needs at 303-462-1590 or e-mail me at johnathon.s.day@wellsfargo.com . I look forward to working with you.
Shane Day