Home Improvement Loans In California
There are many options for financing home improvements, one of which your hard earned cash. However, most people need some kind of financing to make home improvements or to remodel their home. Following is a summary of the different types of home improvement or home remodel financing that is available in 2014:
Federal Home Improvement Loans
Currently there are three options that provide federal home improvement financing:
Fannie Mae Homestyle Renovation Mortgage
The HomeStyle Renovation mortgage permits borrowers to include financing for home improvements in a purchase mortgage or refinance of an existing mortgage on their property.
How Much Money Can You Borrow For Home Improvement?
This type of home improvement loan is popular because it provides financing for up to 50% of the “completed” value of the property with one mortgage. Thus it is a very easy and convenient process. Eligible borrowers include individual home buyers (and owners), investors, nonprofit organization and local government agencies.
What Type Of Repairs Or Improvements Are Allowed?
The HomeStyle Renovation financing can used for repairs or renovations that are permanently affixed to the property and also improve the value of the property.
Other benefits include:
- Cost-effective way to renovate or improve home
- One mortgage so you pay closing costs one time
- Loan is government guaranteed so typically has lower interest rates than conventional home loans
- Loan amount is based on “as-completed” value of home or cost basis (purchase money loans) whichever is less.
Call Us Now – to find out how you can buy a home and renovate it to your style!
FHA 203(k) Loan (Full)
Another great option to finance the purchase of a home and the cost of home improvements into one loan. Also works for refinancing a current home loan to incorporate the cost of home improvements. This loan type is also government insured which means it will usually offer lower interest rates than the more conventional loans.Some of the benefits of this type of renovation loan are:
- Major renovation such as foundation work are allowed
- Allows the 3.5% down-payment that is typical of FHA home loans
- Allows seller to contribute up to 6% towards closing costs
- Allows closing prior to renovation work completion
- One closing means pay closing costs one time
- Loan amount can be up to 110% of “after-improved value” from appraisal
The services of a general contractor and a 203(k) consultant are required an this type of renovation is usually substantial. Click here for more information.
FHA 203(k) Loan (Streamlined)
This type of home renovation loan is specifically for borrowers who are looking for financing of minor home improvements. It requires less paperwork and the loan process is more simple than that for a full FHA 203(k) loan. Again this type of loan is used to purchase and finance the improvements.
The differences between the Streamlined FHA 203(k) Loan and the Full FHA 203(k) Loan are:
- the services of a general contractor or other licensed professional are not required
- The maximum loan amount is $35,000 – there is no minimum
- No major work is allowed such as structural work
- Click here for more information on eligible work.
Differences between the HomeStyle Renovation Loans and the FHA 203(k) Loan
The FHA home loans currently require a FICO score of 550 with 3.5% down-payment. The property has to be owner occupied. FHA loan limits apply and vary according to county. Please call us at (949) 313-7333 to find out the loan limits that apply to you. Also financing is available for FHA approved Condominiums only.
In contrast, the Fannie Mae renovation loan allows for financing which may exceed the FHA limits. Also the Fannie Mae loan will require a minimum down-payment of 5%. The Fannie Mae loan allows financing of “luxury” items such as pools, outdoor kitchens, spas etc.
Also Fannie Mae allows financing of all Condominiums and homes where work may have begun but was not completed prior to sale.
We also offer conventional construction loans. These loan products offer loan amounts to $2,500,000, with financing up to 90% of the completed appraised value. If you have a low FICO score or and adverse information on your credit history you may still qualify. Please call us at (949) 313-7333 for more information.