Additional Home Renovation Loans FAQs
Can I do a home renovation loan during the purchase of a home? How does it work?
You can definitely do that. Like the refinance program above, the appraiser takes the upgrades into effect on the appraiser. You will close on the purchase of your new home per the purchase contract terms and add the construction terms to the transaction. While we process your loan, you gather bids from contractors and select one to do the work. We add the costs to the purchase price and then determine the loan amount per your program guidelines.
Do you have a jumbo home renovation program?
Yes, we have a jumbo home renovation program. Contact us to learn more about this program.
What types of loan programs allow me to do a renovation?
In short, we offer FNMA, FHA and a jumbo renovation product. FNMA’s Homestyle program allows renovations up to 95%; FHA allows repairs/renovation to 96.5% via the 203k programs, and jumbo to 80% of purchase price (plus construction costs) for purchases. The same percentages apply to refinances but we use the appraised value with improvements to be completed.
If I am purchasing a home, can the seller pay for repairs in one of these programs?
In short, yes. We can do a simple escrow holdback where the seller sets aside a portion of his proceeds to fund your renovation costs.
Is there a limit on what can be borrowed for a renovation?
Yes. FNMA, FHA and most lenders do not allow the renovation costs to be greater than 50% of the acquisition price.
How soon does all the work need to be completed?
Depending on the program being used, we can go up to 100 days to complete the project. That being said, not all programs offer that generous of a timeline. It is wise to get a solid completion estimate up-front from the contractor as extensions can get expensive. If you need a longer timeline, we will be discussing a construction loan.
Can I upgrade or add appliances?
You can add appliances to the renovation costs if they are built-in. That includes refrigerators. The reasoning is that if financed, the appliances need to be part of the home and add value. If the appliances are not built-in, they can be rolled away at any time.
How does the builder get his money?
The builder or contractor will submit a draw request to our construction department who will, in turn, disburse the draws to him after inspection.
How many contractors can I use?
That depends upon the program. You need to keep in mind that using more than one contractor may cost more. A renovation borrower may have between one and three contractors.
Can I add a pool?
Yes. We do offer a program for the addition of a pool.
When the project is complete, what do we need to do?
Once the bank disburses the remaining construction funds, the contractor will sign an “all bills paid” affidavit to ensure no liens remain outstanding. You don’t need to do anything!