Homes that need some fixing-up are often more affordable than brand-new construction. What’s more, government agencies want buyers to purchase these homes. By combining mortgages with renovation loans, government loans make sure you only have to pay one monthly payment.
If you need a home repair loan, there are several options that may be available to you. Government home repair loans come with special benefits that you can take advantage of. The three following loans can help you if you need home repairs:
The FHA 203k loan allows you to borrow more money than the price of the home, so you can make repairs. When connected with an FHA loan, you will only need to make one monthly payment. The minimum amount you can request is $5,000, and the maximum is based on the home’s value.
FHA-approved lenders will use the lesser of the following: The property’s value plus the rehabilitation costs, or 110 percent of the property’s estimated value after rehabilitation.
HomeStyle Renovation through Fannie Mae lets you finance up to 75 percent of your property’s value for home improvements. If you are using a HomeReady mortgage, your lender will combine your monthly renovation payment with your mortgage.
This loan gives you the most flexibility, including using funds for design improvements or home additions.
HomePath Renovation is a renovation loan that is only available for Fannie Mae-owned homes. Like FHA and HomeStyle construction loans, the monthly HomePath payment includes the purchase and renovation costs. Your renovation costs cannot exceed $35,000 or 35 percent of the completed value.
You may qualify for a government home renovation loan to fix up your new place. With the exception of HomePath, these loans are available for most residential properties. If you meet certain requirements, you may qualify for no down payment home loans.