A Renovation loan can be used to purchase a home or refinance an existing home. It is an FHA loan so the equity or down payment can be as little as 3.5% of the improved value of your home.
Arrange for funds over and above the purchase price of your new home to remodel, make repairs or add a room! A refinance will pay off your existing loan, and provide additional funds for a wide range of improvements – let your imagination go! A renovation loan is a perfect way to fix up a property, or add that extra bedroom you need for your growing family.
There are three basic types of Renovation Loans:
Streamline 203k – Renovation costs generally limited to $35,000. The work can be done by the homeowner or contractors. Typical renovations include painting, carpet and replacement of appliances. This loan does not require a HUD counselor, and is very close to the cost of a normal FHA loan.
Energy Improvements – Replacement of a furnace or air conditioner, or adding double pane windows or insulation are examples of renovations that can be included. An energy audit must be completed to demonstrate the benefit of the improvements. These costs can be over and above the streamline 203k $35,000 limit.
Full 203k – Renovation costs are only limited by the FHA loan limits for the county. The renovations are generally more extensive so require the assistance of a general contractor. An FHA Consultant is involved to ensure the project proceeds according to plans. Remember, the loan is based on the improved value of your home AFTER completion – so you will have the budget to renovate your dream home!