LOAN PROGRAMS

Freddie Mac Choice and Fannie Mae HomeStyle Renovation Loans

Freddie Mac Choice and Fannie Mae HomeStyle Renovation Loans are popular mortgage options designed to help homeowners and buyers finance both the purchase or refinance of a home and the cost of necessary or desired renovations. Freddie Mac Choice Renovation Loans, offered through the Freddie Mac program, provide flexibility for borrowers to address home improvements that increase property value or address critical repairs. Fannie Mae HomeStyle Renovation Loans, a similar program from Fannie Mae, allow for a wide range of renovations, from cosmetic upgrades to major structural changes, all within a single mortgage. Both programs offer borrowers the opportunity to invest in home improvements while benefiting from competitive mortgage rates, making them an appealing choice for those looking to enhance their living space.

Freddie Mac Choice and Fannie Mae HomeStyle Renovation Loans offer several key benefits for homeowners and homebuyers looking to improve or restore a property. Here are some of the primary advantages:

Benefits of Freddie Mac Choice and Fannie Mae HomeStyle Renovation Loans:

1. Single Loan for Purchase and Renovation: Both programs allow borrowers to combine the costs of purchasing or refinancing a home with renovation expenses into a single mortgage. This streamlines the process and avoids the need for separate financing for home improvements.
2. Competitive Interest Rates: Renovation loans often come with rates similar to traditional mortgage loans, which can be more favorable than taking out a personal loan or using a credit card to finance renovations.
3. Flexible Renovation Options: Fannie Mae HomeStyle Loans support a broad range of renovation projects, from minor cosmetic updates to major structural repairs. Freddie Mac Choice also allows renovations that improve the livability, safety, or value of the home, including energy efficiency upgrades and necessary repairs.
4. Increased Property Value: These loans can help increase the value of the home through improvements, which can be beneficial when it comes time to sell or refinance. Homeowners can customize the space to meet their needs, which can enhance long-term satisfaction with the property.
5. Low Down Payments: Both loan options offer low down payment requirements. Freddie Mac’s program allows down payments as low as 3%, while Fannie Mae’s HomeStyle Loan requires a minimum of 3% down for primary residences.

Who Should Consider These Loans:

1. Homebuyers Purchasing a Fixer-Upper: Buyers who are interested in purchasing a home that needs significant repairs or upgrades but may not have the upfront cash to cover renovation costs should consider these loans. They provide an affordable way to finance both the purchase and renovation.
2. Current Homeowners Looking to Renovate: Homeowners who want to improve their existing property, whether for personal use or to increase its market value, can use these loans to fund everything from minor updates to major renovations.
3. Real Estate Investors: While primarily geared toward owner-occupied homes, the Fannie Mae HomeStyle loan can also be used for second homes and investment properties, offering an opportunity to renovate and potentially increase rental income or resale value.
4. Borrowers Seeking Energy Efficiency Upgrades: Both programs allow for energy-efficient improvements, making them a great option for homeowners looking to reduce their environmental impact and energy costs.

By offering flexible financing options with low down payments and competitive interest rates, Freddie Mac Choice and Fannie Mae HomeStyle Renovation Loans can be an ideal solution for buyers and homeowners looking to invest in their homes without the need for multiple financing products.

Let's explore some important details of Freddie Mac Choice and Fannie Mae HomeStyle Renovation Loans below.

Underwritten In-House

• Types of repairs: Health & Safety, livability, structural repairs, luxury items (think pools).
• Maximum renovation costs can be up to 75% of the after-improved value (Manufactured Homes: the lessor of $50,000 or 50% of the "as completed" appraised Value).
• Occupancy allows for 1-4 unit Owner occupied, 1-unit Second Homes, and 1-unit Investment.
• Renovations MUST be completed within the following timeframe:
  • Fannie Mae HomeStyle = 15 months from closing
  • Freddie Choice Renovations = 15 months from closing
• Contractor can get up to 5 draws + final inspection(1004D) with an initial draw at closing for 50% of the material costs.
• There will be a 10% holdback on each draw (not including initial draw).
• Contractor to submit approval package for acceptance review.
• Maximum number of contractors: 1-General; Specialty allowed as needed (on both Fannie Mae HomeStyle and Freddie Choice Renovation).

Important Contractor Requirements:

• Contractor License
• Liability Insurance
• Workman's Comp Insurance Cert or Waiver
• IRS W-9
• Driver's License

Note: MAXIMUM OF 3 LOANS PER APPROVED BUILDER/CONTRACTOR IN PROCESS AT ONE TIME FOR ALL LOAN TYPES. 

VA Alterations and Repairs

Underwritten In-House

• Type of Repairs: Non-Structural unless ADA/Handicap Accessibility related repairs.
• Maximum repair amount: $50,000.
• No Minimum repair amount.
• Owner Occupied Only.
• Renovations MUST be completed within 4 months from closing.
• There will be a 10% holdback on each draw.
• Contractor can get up to 3 draws + final inspection (1004D).
• Maximum number of contractors: 1-General with Builder ID issued by VA.
• No funds to be disbursed at closing.

Important Contractor Requirements:

• Minimum 3 years of experience required.
• All Contractor License)s) required by State.
• Liability Insurance.
• Workman's Comp Insurance Cert or Waiver.
• IRS W-9

Note: MAXIMUM OF 3 LOANS PER APPROVED BUILDER/CONTRACTOR IN PROCESS AT ONE TIME FOR ALL LOAN TYPES.