Fannie Mae HomeStyle home loans allow people to include the expense of contract work into the loan. It can be used for the acquisition of a new home or the refi of a current home. It can apply to little or big projects and therefore is a great option for buildings needing improvement. The following overview of HomeStyle home loans includes important facts.
Types Of Properties Eligible For Fannie Mae HomeStyle Home Loans
Fannie Mae HomeStyle home loans may apply to different classifications of real estate, although there are certain restrictions. Single family properties are usually okay. Condos must be approved by FNMA and only interior work is permitted. Multi-family dwellings are allowed but the total number of units can not change from the renovation. Properties that will not be approved are mixed use buildings, cooperatives, new construction, and multi-family properties that are not occupied as a primary residence.
Limits And Terms
There are two different ways of calculating value. One is the forecasted value when completed based on a formal appraisal. The other is the purchase value of the home and the total repair cost. The lesser of these two is used to calculate the loan-to-value (LTV) ratio. This determines the mortgage amount.
The highest LTV depends on the type of real estate. For properties that will be used as a primary residence, 95% is permitted for single families, 85% for multi-families with 2 units, and 75% for 3 to 4 unit multi-families. Second homes are maxed at 90% and single family investments 85%. Obtaining cash out is not allowed for these loans.
Overview Of Home Repairs
Home repair estimates must be reviewed for underwriting approval. All estimates must have comprehensive details on the work, labor and material charges. Funds for the home repair expenses are held in an escrow account at settlement and paid out as projects are finished. Certain paperwork is required for each contractor. Home buyers may not request compensation for work completed on their own. All home repairs must be completed within 6 months of closing.
Overview Of HomeStyle Home Loans
This overview of HomeStyle home loans discusses only some of the most popular questions regarding Fannie Mae HomeStyle home loans. More conditions and restrictions apply to program processing and approval. All information is also likely to change without notification. Consult with a mortgage officer for updated information and to determine whether it is a good fit for you.