In this post, we explain some key things about the Fannie Mae Delaware home Renovation Loan.
When looking for your ideal Delaware home, it’s rare and fortunate to come across one that meets all of your requirements. Unless you build your home from the ground up, you will inherit the previous owners’ personality and design preferences.
The Fannie Mae Delaware HomeStyle Renovation Loan is your best option if you have specific aspirations for your new home, such as a detached garage, pool, and other luxury renovations. With all things equal, it covers luxury renovations that aren’t covered by conventional renovation loans.
What can I do with the FNMA loan?
Other options, such as the FHA 203k Loan, are fantastic for owner-occupied home improvements, but they come with some limitations.
Homeowners can use the FNMA Loan to:
1. Finance high-end renovations that aren’t allowed under FHA rules.
2. Obtain funds to pay housing costs while improvements and construction are being completed.
The cost of necessary upgrades and enhancements is incorporated into the HomeStyle Renovation Loan package. Unlike other loan products, this type of loan is based on the property’s “as-completed” value, which includes all upgrades.
Nonetheless, funding for the upgrades will not be handed to homeowners or contractors until an inspection certifies that the work is complete.
What is the difference between a Fannie Mae Renovation Loan and a FHA 203K loan?
While both loan options support upgrades to your potential house, there are some important distinctions:
1. The Fannie Mae HomeStyle loan requires a minimum down payment of 5%. On the other hand, FHA 203k loans require 3.5 percent of the purchase price.
2. Credit Requirements – HomeStyle Renovation lenders typically require a higher credit score to qualify. Borrowers with bruised or poor credit will have a more difficult time getting accepted.
3. Closing Charges – Closing costs on FHA 203k loans are normally greater than on Homestyle Renovation Loans.
4. A HomeStyle Renovation Loan can be used for primary, secondary, or investment residences, but an FHA 203k can only be utilized for a primary residence.
Usage of Renovation Loans
There are significant differences in how the various Renovation Loans in Delaware are used. The FHA 203k Renovation Loan can be used to perform renovations or upgrades on an existing house, with some limitations on the amount and types of repairs depending on whether you are taking out a limited or full 203k loan.
The Delaware HomeStyle Renovation loan and the FHA 203k Rehab Loan both require the borrower to use only licensed professionals who have been approved by the lender to complete the renovations.
Requirements for getting a HomeStyle Renovation Loan
There are property restrictions that the home must meet. The residence must be one of the following to be deemed eligible:
1. A primary dwelling (no more than four units)
2. An investment property with only one unit (co-ops, condos)
3. It can’t be a prefabricated house (mobile house)
It’s vital to understand that the Delaware Homestyle Renovation Loan does not give credit for sweat equity; all work must be completed by a licensed expert.
While a HomeStyle Loan for home Renovation has many benefits, it is not the loan to pursue if your credit is damaged or sub-par, or if you plan to do luxury upgrades. For those with bad credit and a modest down payment, the FHA 203k is the best option. The maximum loan amount for Homestyle Renovation Loans is $548,250, which is also the maximum conventional loan limit.
Could the Delaware Homestyle Renovation Loan be right for you? Do you want to hear your other options? Reach out to Ashley Lyon for further assistance.