If you could design your Dream Home, what would it look like?
If you're like most people, you'd choose a home that expresses your individual style. Whether that includes modern, high-end finishes, solid-surface countertops, or a shower that feels like a rain forest, the choice is yours.
What are you dreaming of?
- A grand kitchen
- A bathroom for every bedroom
- A home office
- An outdoor oasis
- A stylish laundry room
- A garage bar
If you can dream it, you can also find ways to finance it.
Here’s how it usually goes: You buy a fixer upper for a great price with a vision of how you're going to put some sweat equity into it and transform it into the home of your dreams. This of course means you have to find the time to do the work (goodbye evenings and weekends), ask for help if you aren’t a builder or at least handy with tools, find the finances to pay for it (credit cards, store credit, extra cash, home equity loan), and keep the excitement of your dream alive throughout the whole ordeal.
Or you could get a renovation mortgage. This option allows you to get the funds needed to buy the property AND the funds you need to make the renovations/repairs on your house. And it's all rolled up into one mortgage with affordable monthly payments. Just as important, you can pay for a professional to do the work and to get it done in a timely manner.
With interest rates where they’ve been for the last few years, for every $1,000 you roll into the mortgage, you’ll only pay about $6 more per month on your house payment. So if you need a $20,000 kitchen upgrade, you can plan for about $120 more per month. Not too bad!
What are my renovation loan options?
You have a few choices for financing your dream home remodeling project. Here’s a look at a few popular options:
- FHA 203(k) Standard
- FHA 203(k) Limited
- HomeStyle Renovation
The FHA 203(k) loans are essentially the same product, with differing requirements or allowable repairs. With this loan, you can borrow up to 96.5% of the appraised value - based on the value when the improvements or repairs are completed – to purchase (or refinance) a home and complete the renovations.
There are a few key differences between the two: the Limited 203(k) doesn’t cover structural repairs. Anything structural needs to be bumped to the Standard 203(k). Also, the Standard 203(k) requires a HUD consultant on the loan. This person draws up the paperwork and works with the buyer and their contractors to get a write-up before the appraisal (we can put you in touch with a HUD consultant). The Limited 203(k) does NOT require a HUD consultant. And finally, there’s a cost difference. The allowable cost of renovations for the Limited 203(k) is $35,000 MAX. If your repairs and renovations go above $35,000 then you need to get into a Standard 203(k) loan.
With the HomeStyle Renovation mortgage, you can buy a house and fix it up or refinance your existing mortgage and receive funds to cover the costs of repairs, remodeling, renovations or energy efficient improvements to the property.
With a 10% down payment you can add your taste and style to a house to make it your home with remodeling projects like a new kitchen, bathroom, room addition or energy efficient upgrades.
As you can see, renovation loans can be a great tool to help you achieve your dream home. So go ahead, start dreaming about those new kitchen cabinets, matching appliances (for once!) and granite countertops.
When you’re ready to plan your remodeling or renovation project, find your local Amerifirst branch or apply online, and someone from our Renovation team will be happy to sit down and discuss the possibilities.
Or download our Renovation Loan Guide for more details.