The #1 Guide To Getting Pre-Approved For Homestyle®, FHA 203K, Portfolio, & VA Renovation Loans!
Get up to $2 Million In Extensive Renovation Work with in-house Portfolio Options and *Up To $50,000 Extra Before Or After Closing.
*Conventional, FHA, & VA RENOVATION LOANS!
You’re Looking To Renovate or Rehab Your New Home Purchase or Existing Primary Residence, So Why Choose BuildBuyRefi Over Other Home Lenders?
We Provide Some Of The Hottest Renovation loan Programs of any 50-state bank, Working 7 days a week around Your Schedule, Not Ours!
If you visit other websites looking for a rehab or renovation loan, you will notice most start out with this one question: What is a renovation loan?
The short answer, it’s a mortgage designed to finance renovations for your new home or existing property into one single, low-rate loan. We go beyond other banks by focusing on the more important aspects you want to know, like discussing the programs that may fit you best and getting you pre-approved quickly and easily at a low attractive rate and term. As an FDIC Insured Bank, we provide the FNMA Homestyle, FHA 203k, In-House Portfolio, and VA renovation loans for 1-4 family homes for owner-occupied properties in all 50 states.
This Home Renovation Loan Guide is designed to provide the most accurate information you need to make the best possible decision on who you choose to fund your loan. We take the small-town bank approach with the more significant 50-state bank risk, especially in this program type.
We’re probably not the first company you found when starting your online loan search; if it is, we’re lucky to have found each other first. Many lenders advertise for renovation loans which provide far less superior options, so let’s get right to it and first take a short test to see if you are in the right place.
Use These Links To Skip Ahead In The Guide:
Whether You Buy or Refi, The Qualification Requirements Remain Similar For All.
Say “YES” to the top 4 qualifiers, and you’re one step closer To Getting Access To Some of the Hottest FHA 203k or VA Renovation loans BuildBuyRefi.com has to offer.
Respond “NO” To Any Of These Statements, And You May Still Qualify!
(1). You’re seeking A Renovation or Rehab Loan on a Single Family, Modular, Or Duplex that is Your Primary Residence.
To complete a renovation loan using any government-backed programs, you must live in the property as your primary residence and in no way can use this loan for rental, investment, commercial or mixed-use property.
Our FHA 203K Loan for limited and standard renovations allows you to rehab a 1—4 unit property, as does our VA Renovation Loan. In no case can this loan type be used for demolished or razed homes.
Our Homestyle® program allows you to complete a purchase or refinance renovation on a primary residence, second home, and investment property. FNMA Homestyle will allow renovations on 2-4 unit properties only if they are primary residences, and we have other in-house portfolio renovation programs that may allow over one unit.
(2). You don’t Intend to Complete The Work Yourself, and You will use Only One General Contractor, Subcontractors Are allowed.
All FHA 203k, Fannie Mae Homestyle®, VA Renovation, and In-House Portfolio rehab programs offered by BuildBuyRefi require 1 General contractor to handle the repairs. Under that General contractor, you can have Subcontractors complete the work you designate.
None of these programs allow you to act as the “Do It Yourself” (DIY) General Contractor or complete the work yourself. Each program requires approval and inspections of the work to qualify for a payout of the draws and payments to satisfy the loan approval and guidelines. There can be no identity or conflict of interest with the use of contractors, nor can family members be permitted.
(3). Your Upgrades Are Cosmetic Renovations, or Structural And are not what would be considered Luxury Upgrades To your Property. Except when using our Homestyle® program.
Each loan has subtle differences in what is eligible and ineligible for renovation. The only program that allows structural upgrades or changes to the structure is the BuildBuyRefi FHA 203k Standard program which comes with the highest number of updates. Our FHA 203k Limited and VA Renovation loans allow for repairs, appliance upgrades, or cosmetic rehabs within certain loan limits.
None of our programs allow for luxury upgrades such as swimming pools, outside spas, outdoor saunas, outdoor fireplaces, hearths, gazebos, bathhouses, tennis courts, satellite dishes, or any work taking longer than allowed per program. We can discuss further what is and is not allowed in each FNMA, FHA, Portfolio, and VA renovation loan.
(4). Your Renovations Will Take No Longer Than 6-Months For FHA 203k Limited, 4-Months For VA Rehab, or 6-Months For the FHA 203k Standard or Fannie Mae Homestyle®, And The Home Will Not Be Vacant More than 30 days.
Strict time guidelines must be met when completing any of these programs, so they must adhere to this schedule when choosing a contractor to complete the work. The FHA 203k limited loan has a six-month completion date, the VA Renovation loan has a four-month or 120-day completion date, and the FHA 203K Standard loan, which does allow for structural repairs or room additions, and our FNMA Homestyle® renovation has a six-month completion date. We also offer jumbo renovation programs with longer time frames.
These dates protect you, the homeowner, from making wise choices with approvable contractors. Additionally, each program has subtle differences in how many draws are allowed to the contractor. We discuss more regarding the number of draws permitted below.
Great, if you answered “YES” to each of these, you passed the first part of our pre-qual test. If you have a “NO” somewhere, then call us now, or take our eligibility checker to discuss your scenario. Answering “NO” doesn’t mean you won’t qualify; it just means we need to find out which area is impacting your request.
Before we discuss the programs we offer, let’s review the most important ways to make the process as smooth as possible.
First, There Are No Guarantees Because There Are Many Unknowns.
Anyone offering you a guarantee is probably someone you want to avoid. It’s not guaranteed until you have met all conditions and closed your loan. But let’s discuss further how you can get the desired results.
You deserve A-Team Known For Wicked Fast Speed & 5-Star Service. Here’s Why!
Applying and getting pre-qualified for a rehab or renovation loan is only the first step; it doesn’t guarantee you’ll get the rate, terms, or program you were pre-qualified for. Many factors go into achieving that low rate and great program you wanted, and that is “the speed at which YOU move.” Time plays against every borrower in a big way with any loan.
Learn the 4 most important reasons to “light the fire” and Take Fast Action on Your FHA 203K, FNMA Homestyle®, Portfolio, or VA Renovation Pre-Qualification!
Rate Locks Expire: Many loans are locked for 30 days because the shorter term allows you to get the lowest rate possible. If you lose your rate lock by letting it expire or needing to extend it because you took weeks to get the items back, it will cost you more money or a higher rate. With rates recently rising, a higher price could risk your approval for the loan you wanted. A long delay could require you to re-qualify for the loan again.
Programs Could Disappear: It’s happened before; we’ve witnessed many loan programs get wiped out overnight. Investors can choose to change their risk portfolio and stop offering programs altogether; that is why moving fast on the approval you have in your hand means taking action.
Your Job or Income Status Could Change: What if you lost your job, your income was reduced, or you wanted to take a new job, but it put your loan closing in jeopardy because you took too long to get documents back? Any changes in your employment status could come back with more unfavorable terms or, worse, a complete loan denial.
Your Credit Score Could Dramatically Change: We’ve seen this happen so many times, a borrower maxes out their credit card for business, or they miss a payment because they weren’t paying attention, or a judgment/collection was filed for any host of reasons. Not closing quickly under the same credit terms is another reason underwriters require you to re-qualify or cancel the loan.
Follow These 3 Steps to Get Competitive Rates On Our Renovation Loans, Such as The FHA 203k, The Fannie Mae Homestyle®, The VA Renovation Loan, and Our Alternative Options For Rural Properties & Jumbo Properties With Our In-House Portfolio Of Rehab Loans.
Find a lender you feel confident in and apply to get pre-qualified from that lender. Make sure the lender has the program you want, and if they don’t sound confident they can close this program and have experience and reviews doing so, then keep looking! You may want to check out our reviews to help give you this confidence.
Request a rate lock on your loan once you are pre-qualified and get your lender every item needed as fast as necessary to close your loan so your rate lock doesn’t expire. Your side of the process is only complete when the loan is closed, not when you think you sent enough documents to satisfy what is requested from the lender. Underwriters ask for specifics, so work with your banker to only keep to the specific requests.
Take responsibility and move fast; as you know, rates have been on the rise; wait too long, and you could end up with a higher interest rate, therefore qualifying for a smaller loan amount than if you locked in faster on a lower rate. It’s your job to ensure you meet all requirements, not the loan officer's or lender’s position to hold the file open as long as possible, paying for the rate lock extension out of their pocket. Locks cost money because your lender reserves the funds and rate you want. It’s your responsibility to ensure you move fast so as not to let that lock expire, or it could end up costing you.
BuildBuyRefi Provides Renovation Loans On These Owner-Occupied, 2nd Home, & Investment Property Styles.
(1). Manufactured Homes
Any double or triple-wide manufactured home larger than 600 sq. ft. and built after June 15, 1976. The property must not be on leased land or in a trailer park and must be on a permanent foundation.
(2). Single Family & Modular Homes
Any site/stick-built home or modular home constructed and shipped to the site. There are no age restrictions on these properties; however, they cannot be mixed-use, demolished, razed homes, co-ops, investments, or structures relocated to or from another site.
(3). Duplexes & 3-4 Unit Properties.
Any multi-unit property, such as a side-by-side or top-and-bottom duplex allowed as long as one of the units is wholly owned and occupied by the primary borrower for the FHA, VA, programs and 1-4 Units for the Homestyle® & Portfolio programs.
(4). Townhouses & Condos
For FHA 203K limited, standard, and Portfolio rehab loans, any townhouse or condo must be approved or accepted by HUD, FHA, VA, Fannie Mae, or Freddie Mac. Each program has specific guidelines that expand further. No exceptions for approved proper properties.
*Modular homes are not considered manufactured homes; they fall under the same category as Single-Family Homes and are not viewed differently by our underwriters. Homes that have never been completed cannot be accepted into renovation programs as this would fall under a one-time close construction loan program. Please review our OTC construction loan programs if you feel this may apply.
What Do Conventional, FHA, USDA, & VA Mean, And Which Program To Choose?
These terms (FHA, FNMA, USDA, VA) refer to the government-backed program type, and more often, the choice is based on your goals. These can also be decided by other factors such as location, loan amount, borrower status, and the borrower’s desired transaction request. Each program has a different set of product offerings underneath it that are uniquely different. Let’s explain what these are.
These four different Renovation program types are available on Renovation & Rehab Loans Through BuildBuyRefi.
FHA 203k Standard & Limited Government Loans.
FHA stands for the Federal Housing Administration, a government agency devised to help increase homeownership to lower credit scores, income amounts, and debt ratios. Because of this, the FHA loans come with Mortgage Insurance and do not automatically drop off when you get lower than 80%; you will be required to refinance out of an FHA loan if you want to drop the mortgage insurance monthly premium.
However, the FHA loan allows up to 96.5 on a purchase renovation for the FHA 203k loans. However, you’re allowed to purchase a new home and rehab or renovate simultaneously, in theory going over 100% of the purchase price you agreed upon to design the house how you want it. FHA also allows up to 85% cash out when you want to consolidate debt. The FHA loan can also be used with our BuildBuyRefi two-time close construction loan for homes and land up to 95%.
The FHA has maximum loan amounts depending upon the specific country your property is located.
FNMA (Fannie Mae) Renovation Loans
The Federal National Mortgage Association (FNMA), commonly known as Fannie Mae, is a United States government-sponsored enterprise (GSE) and, since 1968, a publicly-traded company. FNMA governs the “Conforming” loan limits, which set county limits for single-family, up to 4-family units. Their Homestyle® renovation program allows for renovations over the amount of your purchase price or renovation value.
Eligible property types are new and existing single-family properties, modular homes, condos, and PUDs that meet Fannie Mae's guidelines. Ineligible property types are condotels, cooperatives, manufactured homes, ground-up rehabs, mixed-use properties, one lot parcels with two separate dwellings.
The Homestyle program allows a max of 95% loan to value on Single Family Owner-occupied Properties, 85% for two-family owner-occupied properties, and 75% for 3-4 unit properties. However, single-family second homes are allowed up to 90% on the purchase or refinance, and Investment properties are allowed 85% for purchase and 75% for refinancing. The FNMA Maximum amount follows the 2019 conforming loan limits.
Portfolio Renovation Loans.
Our portfolio renovation loans are underwritten, funded, and disbursed in-house. They are available for 1-4 Unit Multi-family properties, owner occupied, 2nd homes, and investor properties. They allow for extensive renovations, typically when you require over $200,000 in renovation work, up to $2,000,000.00 per project. Many other banks do not offer such extensive renovation projects or on investor properties, and this is we set ourselves apart.
VA Home Loans For Active Military, Disabled or Retired Veterans, and their Spouses.
VA home loans are some of the best benefits available to Veterans and their spouses. Of all government-backed renovation loan programs, the VA loan offers the highest rehab amount and competitive interest rates and comes with no mortgage insurance. This is why more Veterans should take advantage of this program.
Sometimes Realtors will turn away this loan type, which means you’re working with the wrong realtor because they are the strongest of all government-backed home loan programs. Every program offered through the VA allows for 100% or higher in loan financing. Purchase, cash-out, consolidation, VA IRRRL streamline, and this VA Renovation loan offers up to $50,000.00, whereas other lenders still provide $35,000 for structural rehab and interior renovations. Also, we provide the complete 100% OTC construction loan, buy your land and home in one loan, not three separate transactions.
The VA home loan comes with fewer reports required for manufactured homes, so it moves much faster, though we are wicked fast on all property types. You’ll even be able to finance large tracts of land and have certain exceptions granted that you will not find in conventional, FHA, or USDA types. The VA loan has no location or income restrictions, but it has certain DTI and loan amount restrictions based on the areas you buy in.
Our 5 Most Popular Renovation & Rehab Loan Products & Details.
You most likely aren’t sure which product will be best for you when choosing your renovation loan. Whether you are purchasing a new home that you want to update or refinancing your existing home, these products are explained in more detail to make the best choice for you and your family.
#1. The Limited FHA 203K Loan
The FHA 203k Limited Renovation Loan has a maximum allowable repair limit of $35,000; however, some of these costs must be maintained for overage allowance. If your repairs are of a non-structural and non-luxury upgrade nature and are limited to $35,000 in total costs, and you're not a Veteran, then this is the product you want to seek out. Having your repairs rolled into one loan is more accessible than qualifying for a 2nd mortgage, also known as a home equity loan, and comes with one low fixed-rate mortgage.
The FHA 203k allows for up to the maximum allowed loan terms, with the applicable mortgage insurance, and to remove the required MI once you get below 79% loan to value, you would need to refinance to a new program.
For Purchase loans, this product can be used on HUD REOs, foreclosures, and short sales, as well as minor updates to existing homes for purchase or refinancing. The repairs can be completed by only 1 General Contractor (GC), which may use multiple subcontractors if required underneath the GC. The borrower cannot complete any of the repairs themselves or act as the general contractor, and ALL improvements must be finalized in six months. The work must begin within 30 days of the loan closing and not cease for more than 30 days. The GC must submit a qualifying bid outlining all work to be completed within 180 days and will receive a maximum of 2 draws on the property, 1 for up to 50% of the work on start and the remaining 50% upon completion and final inspection of the work.
Eligible improvement types are; Eliminating health and safety risks, connecting to public water & sewer systems, repairing or replacing plumbing, heating, AC, and electrical systems, making changes for improved functionality and modernization, and creating a new roof as long as structural integrity is intact, siding, gutters, and downspouts, energy conservation, improving accessibility for persons with disabilities, repairing fencing, walkways, and driveways, new refrigerator, cooktop, oven, dishwasher, built-in microwave, washer, and dryer, repairing or removing an existing in-ground swimming pool, installing, repairing or replacing exterior decks, patios, or porches, covering lead-based paint issues.
Ineligible improvements that are structural or considered luxury are not allowed. These would be converting one-family to two-family or two-family to one-family property, repairing foundation issues, moving another structure to the site or room additions to the exterior of the property, landscaping site improvements, new swimming pools, outdoor saunas, whirlpools, or bathhouses, tennis or basketball courts, satellite dishes, barbeque pits, outdoor fireplaces or hearths. Additionally, tree surgery is not allowed unless it endangers existing improvements to the property.
Eligible property types are modular homes, single-family homes, duplexes, FHA-approved condominiums, and HUD REO properties.
Ineligible property types are demolished or razed homes, relocated structures, mixed-use properties, commercial properties, co-op properties, investment properties, mobile homes on leased land, and non-FHA warrantable condominiums.
There are specific requirements of the General Contractor, Insurance and Liability Requirements, Appraisal Requirements, Bid Requirements, Inspection, and Disbursement Requirements. Certain fees are allowed to be rolled into the closing. You will want to discuss these additional requirements with your banker once you have decided you are ready to move forward. Additionally, since these loans are treated as New Purchase or Rate and Term Refinance loans, the maximum allowable cash back to the borrower cannot exceed $500.00, except in Texas, where the amount is $0.
#2. The Standard FHA 203k Loan
The Standard FHA 203k Loan has no maximum allowable repair limit except current FHA limits within your specific county loan limits. If you have a zero or low balance on your existing mortgage, you can use up to your allowed county limits to access the equity needed for repairs. This program does allow structural changes to the property, and aside from this fact and the ability to go over $35,000, the majority of this product is similar to the limited 203k. To qualify for this product, there must be over $5,000 in renovations or structural repairs.
The FHA 203k Standard also allows for FHA’s maximum loan terms, will still have the applicable mortgage insurance, and to remove the required MI once you get below 79% loan to value, you would need to refinance to a new program.
For Purchase loans, this product can be used on HUD REOs, foreclosures, short sales, and updates to existing homes for purchase or refinancing. The repairs can be completed by only 1 General Contractor (GC), which may use multiple subcontractors if required underneath the GC. The borrower cannot complete any of the repairs themselves or act as the general contractor, and ALL improvements must be achieved within six months. The work must begin within 30 days of the loan closing and not cease for more than 30 days. The GC must submit a qualifying bid outlining all work to be completed within 180 days and will receive a maximum of 5 draws on the property allowed. This program requires a HUD consultant to be assigned to watch over the improvements. Additionally, the client can finance up to 6 months of mortgage payments into escrow should the work being completed render the home not livable during the repair timeframe. There is also a 10-20% contingency reserve requirement; this ensures against any unforeseen costs or overage and is suggested by the HUD consultant and program guidelines.
Eligible improvement types are: Converting a one-family Structure to a two-family structure, decreasing an existing multi-unit Structure to a one- two-family structure, making structural alterations such as the repair or replacement of structural damage, additions to the structure, and finishing attics or basements. Rehabilitating, improving, or constructing a garage – can be either attached or detached but must have a permanent foundation. Eliminating health and safety risks, installing or repairing wells and/or septic systems, connecting to public water & sewer systems, repairing or replacing plumbing, heating, AC, and electrical systems, making changes for improved functionality and modernization, new roof as long as structural integrity is intact, siding, gutters and downspouts, energy conservation, improving accessibility for persons with disabilities, repairing fencing, walkways, and driveways, full bathroom updates, complete kitchen updates, correcting or removing an existing in-ground swimming pool, installing, repairing or replacing exterior decks, patios, or porches, landscaping, smoke detectors, constructing a windstorm shelter, and covering lead-based paint issues.
Ineligible improvements Luxury renovations still are not allowed under this program. These would be moving another structure to the site or room additions to an exterior of the property, new swimming pools, outdoor saunas, outdoor whirlpools, bathhouses, tennis or basketball courts, satellite dishes, barbeque pits, outdoor fireplaces, or hearths. Additions or alterations to support commercial use or to equip or refurbish space for commercial use are not eligible. Additionally, tree surgery is not allowed unless it endangers existing improvements to the property.
Eligible property types are modular homes, single-family homes, duplexes, FHA-approved condominiums, and HUD REO properties.
Ineligible property types are demolished or razed homes, relocated structures, mixed-use properties, commercial properties, co-op properties, investment properties, mobile homes on leased land, and non-FHA-approved condominiums. Also, a 203k standard refinances on a property with an existing 203(k) Mortgage is not eligible to be refinanced until all repairs are completed and closed out.
There are specific requirements of the General Contractor, Insurance and Liability Requirements, Appraisal Requirements, Bid Requirements, Inspection, and Disbursement Requirements. Certain fees are allowed to be rolled into the closing. You will want to discuss these additional requirements with your banker once you have decided you are ready to move forward. Additionally, since these loans are treated as New Purchase or Rate and Term Refinance loans, the maximum allowable cash back to the borrower cannot exceed $500.00, except in Texas, where the amount is $0.
#3. The FNMA Homestyle® Renovation Loan
Our Fannie Mae Homestyle® renovation loan has NO maximum allowable repair limit; you are only limited by the equity or value able to be created up to your specific county limit. Unlike other programs, you are not limited to what you can do. You can not do it outside of a complete ground-up rehab, and as long as it creates positive value for the property and these updates and repairs can be maintained within a 6-month window.
The FNMA Homestyle® allows maximum conventional loan terms to come with attractive interest rate options. This is also the ONLY program allowing for second homes and investment properties, as well they are the only program offering renovations for properties that are owner-occupied 3-4 units.
Qualifying applicants may also be able to roll into the loan up to 6 months of mortgage payments if the home is not livable during that time.
For Purchase loans, this product can be used on existing single-family homes, second homes, and investment homes. When the repairs exceed 35,000, they can be completed by only 1 General Contractor (GC), which may be able to use multiple subcontractors if required underneath the GC. The borrower cannot complete any of the repairs themselves or act as the general contractor, and ALL improvements must be achieved in a four-month term. The work must begin within 30 days of the loan's closing and not cease for more than 30 days. The GC must submit a qualifying bid outlining all work to be completed within 180 days. Draws and disbursements are determined based on the percentage of work completed, and no mortgage payment reserve can be financed in the property. Additionally, the property cannot be vacant for more than 30 days. A 10% contingency reserve is required on the Homestyle® renovation loan for any overages or miscalculations in repairs.
Eligible/Ineligible improvement types improve the property's overall value. Can not over-improve the property nor update it with features that do not increase the value of the appraisal in a manner that disqualifies the transaction.
Eligible property types are a bit different for the Homestyle® renovations. They must be single-family construction, manufactured, duplex, 3-unit, or 4-unit properties, Manufactured, Modular homes, condos, and puds that are approved by FNMA only.
Ineligible property types are condotels, cooperatives, ground-up rehabs, mixed-use, or single parcels with multiple dwellings.
#4. The VA Renovation Loan
The VA Rehab loan has a maximum allowable repair limit of $50,000; however, some costs must be maintained for overage allowance. If your repairs are of a non-structural and non-luxury upgrade nature and are limited to $50,000 in costs, this is the product you want to obtain. Having your repairs rolled into one loan is more natural than qualifying for a 2nd mortgage, also known as a home equity loan, and comes with one low fixed-rate mortgage.
The VA RENO loan allows for the maximum VA loan terms, comes with interest rate options that can be lower than FHA and USDA programs, and unlike FHA and USDA, comes with no mortgage insurance (MI) requirement on loan. So if you are a Veteran, this is the product you want to choose over the other options available if you do not need to complete any structural repairs.
For Purchase loans, this product can be used on foreclosures and short sales, as well as minor updates to existing homes for purchase or refinancing. The repairs can be completed by only 1 General Contractor (GC), which may be able to use multiple subcontractors if required underneath the GC. The borrower cannot complete any of the repairs themselves or act as the general contractor, and ALL improvements must be achieved in a four-month term. The work must begin within 30 days of the loan's closing and not cease for more than 30 days. The GC must submit a qualifying bid outlining all work to be completed within 120 days. Draws and disbursements are determined based on the percentage of work completed, and no mortgage payment reserve can be financed in the property. Additionally, the property cannot be vacant for more than 15 days. A 15% contingency reserve is required on the VA renovation loan for any overages or miscalculations in repairs.
Eligible improvement types are: Eliminating health and safety risks, connecting to public water & sewer systems, repairing or replacing plumbing, heating, AC, and electrical systems, making changes for improved functionality and modernization, and creating a new roof as long as structural integrity is intact, siding, gutters, and downspouts, energy conservation improvements, improving accessibility for persons with disabilities, repairing fencing, walkways, and driveways, new refrigerator, cooktop, oven, dishwasher, built-in microwave, washer, and dryer, repairing or removing an existing in-ground swimming pool, installing, repairing or replacing exterior decks, patios, or porches, covering lead-based paint issues.
Ineligible improvements that are structural or considered luxury are not allowed. These would be repairing foundation issues, oil tanks (repair, removal, remediation), any repair/installation for private water systems –(Wells), any repair/installation of the private waste management systems (Septic Systems, Lagoon, Cesspools, Pits, etc.), mold remediation, moving another structure to the site or room additions to the exterior of the property, landscaping site improvements, new swimming pools, outdoor saunas, whirlpools, or bathhouses, tennis or basketball courts, satellite dishes, barbeque pits, outdoor fireplaces or hearths. Additionally, tree surgery is not allowed unless it endangers existing improvements to the property. Also, any repair completed by self-help, “do it yourself,” or that takes more than four months to finish is not eligible. If the scope of work requires more than three draws per specialized contractor or the proposed repairs/improvements need detailed plans, engineering, or architectural exhibits.
Eligible property types are a bit different for VA than its FHA counterpart. We allow renovations on all eligible doublewide and triple-wide manufactured homes, modular homes, and single-family homes only.
Ineligible property types are 2, 3, or 4-unit properties, condos, demolished or razed homes, relocated structures, mixed-use properties, commercial properties, co-op properties, investment properties, or mobile homes on leased land.
There are specific requirements of the General Contractor, Insurance and Liability Requirements, Appraisal Requirements, Bid Requirements, Inspection, and Disbursement Requirements, and specific fees are allowed to be rolled into the closing. You will want to discuss these additional requirements with your banker once you have decided you are ready to move forward. Additionally, since these loans are treated as New Purchase or Rate and Term Refinance loans, the maximum allowable cash back to the borrower cannot exceed $500.00, except in Texas, where the amount is $0.
#5. Our In-House Portfolio Renovation Loans For Jumbo Homes & Extensive Renovations Up To $2,000,000 In Repairs.
Offering the power to buy a home that needs updates at the same time or refinancing an existing home to expand your floor plan, renovation loans offer incredible options. Since no “traditional” USDA-specific renovation loan allows you to do extensive renovations, we have wonderful in-house Portfolio Renovation programs allowing you to buy and renovate simultaneously or complete an extensive renovation on your existing home. We can pair them with FHA, FNMA, or VA Reno Programs offering market competitive rates.
Our portfolio renovation loans are underwritten, funded, and disbursed in-house. They are available for 1-4 Unit Multi-family properties, owner occupied, 2nd homes, and investor properties. They allow for extensive renovations, typically when you require over $200,000 in renovation work, up to $2,000,000.00 per project. Very few banks offer such extensive renovation options, and this is we set ourselves apart.
Our portfolio rehab loan will offer the maximum loan term similar to Conventional, FHA, and VA.
For purchase and refinance loans, this product can be used for minor or significant interior and exterior repairs completed by only one licensed and bonded General Contractor (GC), which may handle multiple subcontractors if required underneath the GC. The borrower cannot complete the repairs or act as the general contractor.
Eligible property types: 1-4 unit Properties, Condos, Townhomes, Primary Residence, 2nd Homes, and Investor Properties.
There are specific requirements of the General Contractor, Insurance and Liability Requirements, Appraisal Requirements, Bid Requirements, Inspection, and Disbursement Requirements. Certain fees are allowed to be rolled into the closing. You will want to discuss these additional requirements with your banker once you proceed. Additionally, since these loans are treated as Purchase, or Rate and Term Refinance loans, the maximum allowable cash back to the borrower cannot exceed $500.00, except in Texas, where the amount is $0.
Generally, we want a minimum “middle of the 3” credit score To Be 620 FICO or higher For FHA 203k Loans and 620 or Above for the FNMA Homestyle®, Portfolio Rehab, and the VA renovation.
Because these programs are quite specific, there are no exceptions to the minimum score requirements on renovation loans. To be accepted, they must receive automated approval from our online underwriting engine first.
My Middle Credit Score Is Above 620; what Rate Can I Get?
This depends on many factors since rates change daily, sometimes multiple times a day; the quote you receive today will most likely be different tomorrow. That is, of course, if you have not locked in your loan.
Borrowers with a 620 credit score may see a little higher rate than those with a 640, 680, 720, and so on. This is because investors offer better rates the higher your score is. They do this because those with higher scores have proven lower credit risk than those with higher scores.
Many people who take out a loan with a lower credit score with a higher rate could raise their credit even if they took out a 100% loan six months to a year later. We are constantly working with our existing clients in cases where that happens and reviewing market conditions to offer an internal streamline refinance.
Do you loan against bad credit… What is the lowest score you accept?
Can we lend lower than 620?
We can not make exceptions to the minimum score requirement in a renovation loan.
A few things happen when a borrower has a score under 620.
#1. The interest rate we can offer becomes too high.
The pricing adjustments for lower scores and loan amounts become a high risk for the lender. And due to us offering the full suite of programs government-backed lending offers, we stay away from dancing with any loan that targets what the government deems to be high costs.
#2. The borrower has limited to no credit, or their credit trade lines are not acceptable to our current underwriting guidelines.
It’s even true that some people can have a 640 credit score with limited trade lines that would not get approved, but it is essential to show our underwriters you can make payments on time and are at low risk for defaulting on your home loan.
#3. The borrower could be a few steps away from a much better credit score.
It's possible that if you fall under the 620 line, there are some areas in that credit repair that could help you become more attractive. In many instances, you don’t have to go through a 3rd party credit repair company, as today’s lenders have tools to help you determine what moves you can make to improve your score. Do what is needed, and not only would you get a lower interest rate, you could qualify for a more substantial loan with better home options than if you settled for borrowing with worse credit.
The 5 Acceptable Income Types When Applying For A Home Renovation Loan.
While we accept almost every income type when verifying and approving these loans, the two we won’t loan on are stated income loans or bank statement-only loans.
W2 Full Time & Part-Time Employees
Self Employed
Active Military Income
Retirement, Pension, 401k regular disbursement income
Social Security or Disability income
It’s important to note that any change during employment status, such as getting fired or switching jobs, is grounds for denial or re-underwriting. You want to avoid any change in your job status while completing your loan, and if there is the slightest chance something might change, you need to speak to your loan officer immediately about this.
Please do not assume it will be approved because you are getting a better offer. Changes like these scare underwriters and increase the documentation you get; it could delay your closing, cost you a rate lock, or lose your purchase money escrow altogether.
You will save thousands in lost time and money by being as upfront as possible with your loan officer.
Additionally, outside of the income requirements, each FHA, FNMA, USDA, and VA renovation program has specific debt ratio guidelines you cannot exceed. The debt ratio is calculated by dividing your total allowable income by the total monthly payments of your new mortgage to get the top ratio and then dividing your total income by the cost of your mortgage plus the expenses of your other existing debt on your credit report to calculate your bottom ratio. Each product comes with its top and bottom ratio requirements; to get these specifics, you will want to talk to your banker or loan officer.
The Truly Determined Borrower Ultimately Deserves a Competitive, Low, Fixed-Rate Mortgage. At BuildBuyRefi, We Offer Great Rates On Our Renovation And Rehab Loans.
You may ask, why do other lenders and even my local bank offer rates, shorter terms, or require higher down payments?
That’s a great question!
Short answer, because they aren’t the experts in these types of loans.
Longer answer…
The Top 3 Reasons Why Other Lenders Find It Hard To Compete With BuildBuyRefi In The Renovation And Rehab Loan Market.
#1. We have Some Of The Most competitive Renovation Loan products, rates & loan terms:
Most lenders, brokers, and banks only have a few programs, not offering anything near the vast array of renovation loan products we have. Their rates are higher and loan terms shorter because they can’t touch the monthly volume we produce. They don’t offer the high loan-to-values because they still view this loan type as Iess desirable, increasing their perceived risk.
#2. We’re seasoned veterans On All Renovation Programs Like FannieMae Conventional Homestyle®, FHA 203k’s, VA Reno, and Our In-House Options.
Most are not seasoned veterans in the renovation and rehab lending sphere, meaning the loan officer you choose to work with might never have closed one of these properties before, and that is a dangerous mix to get involved with. You need a banker who knows how to navigate these product types. They can be documented as burdensome and time-consuming, yet not for our experienced bankers. Most of our bankers have 15-30 years of experience in each lending on these property types.
#3. We Work Daily With Clients Looking To Renovate Their Existing Home Or New Home Purchase, No Matter What The Property type:
Your local bank or credit union may be acting like they are doing you a favor to keep you with them, but they don’t want this product type on their books. They may talk you into walking away from a property in your desired area because of the repairs needed or renovations you want to complete to stay there.
In this case, their inability to be competitive or desire for this product type is costing you more just by staying loyal. You shouldn’t walk away from a property you line in an area you like just because the bank you chose can’t finance this program. Many people have seen great values created by doing the more challenging upfront work to get this property in the shape they want it to be for you and your family.
Don’t Let a Realtor, broker, bank, or lender try to talk you out of this program; if You Can Negotiate It, We will Help You Close and Fund Your True Purchase Renovation Today!
Why pay more when you can spend less?
Why take longer to close your loan when you can close faster?
Why use a less experienced renovation lender when you can use the most qualified?
What are the top 3 reasons to Use A FHA 203k Loan, FNMA Homestyle®, VA Renovation, or Our In-House Portfolio Rehab Loan to buy or refinance?
#1. Get A Home In The Location You Always Wanted But Couldn’t Afford.
Often homes that are already upgraded and updated are at the top of your price range or in a location you wanted but couldn’t afford. And many times, there are “ugly” or “run-down” properties that you wouldn’t even take a second look at. Still, with the renovation loan, more borrowers are finding they can get into the location they want by choosing an undervalued home because it needs tender loving care. If you desire to be in a specific location, this may completely change the options available when you go looking for the “diamond in the rough” that you have the eye to create how you want. Look past the imperfections and make them your very own.
#2. Customize What You Want Now. No More Waiting years For Upgrades.
Instead of selling your home and moving because you think you owe too much to it, you can use a renovation refinance product to make you love your home again. Even more impressive is the ability to use this program for the new home purchase of your dreams. Do you have the ability to look past the ugly to know what it takes to make it yours? Doing so can allow you to custom design the repairs, modifications, updates, and changes you want to make your dream home. Considering the alternative would be a construction loan, which has a longer time to build. Still, when you want to buy or refinance an existing home without being at risk of a home equity loan that usually comes with adjustable rates, the renovation product is the right solution.
#3. Possible to gain equity faster.
It’s entirely possible that because you got such a great deal on the price of your home, you could have more significant equity starting from day one. Take the case of buying the undervalued “uglier” home and making it just what you want; these repairs will increase the value of your home to current market levels. And in the case of refinancing your home, even if you owe close to 100% now based on your loan, qualifying updates and renovations can bring up the value of your home to comparable homes with the same updates and upgrades around you.
As Seen In
5-Star Lender Reviews That WOW!
Richie, OK... so you've officially done something I've never seen in 22+ years selling real estate. Closed a VA Loan on 224 Acres, with a Manufactured Home. CONGRATULATIONS! and THANK YOU!!! Admittedly, I was skeptical (more like pessimistic) when James told me you were going to get this VA Loan completed. And I had many doubts along the way, because I'd seen so many VA Lenders fall flat on their faces, just before the Closing. BUT... You got the Job DONE! Occasionally, I find someone out there who has done an Outstanding Job, helping my Clients... and You are one of these! I'm now officially a FAN of You and Your Work. I would be honored to promote you and your services to other Agents within our company, and I intend to do so. I will call you when I've caught up on my work a bit... and learn more about how I can do my job better on the next VA transaction.
~Tom K. Realtor