Blog


By Jeremy Durham 

Have you ever found yourself in the market for a particular sized home in a certain school district, but everything you’re seeing appears to have last been updated by the Brady Bunch? Have you loved the location of a home, but found yourself walking away from making an offer due to avocado green appliances? Or peach and country blue wallpaper? Did you think to yourself “I wish I had extra funds to buy this home AND be able to remodel it?” What if you could buy a dated home, in the part of town you wish to live and renovate it to your tastes…all before you ever move in? Perhaps you should consider a Renovation Loan as an option. 

When you purchase or refinance a home, your appraised value is based on the value as the home sits right now. In the condition, it’s in, right now. With a Renovation Loan, your home’s value will be based on the projected After Improved value once your renovation work is complete. Adding square footage, an extra bedroom, bathroom, additional living space, all with more modern fixtures/appliances, means instead of the value of a 3 bedroom/2 bathroom home that you are buying/or currently own, your value will be based on comparable homes with 4 bedrooms and 3 bathrooms that closer meet what your home’s square footage WILL be after the work is completed. Also, all of this can be completed in one transaction with between a 3.5% and 5% down payment, or if you already own the home you wish to renovate this can be accomplished with all costs incorporated into your new loan.  

The Renovation option can also be successfully used by progressive listing agents who perhaps have a dated listing with linoleum floors, wallpaper in every room, a 1950’s pink bathtub, and tile etc. Market the home and provide potential buyers looking at that home with the great backyard in just the right school district, as what the house CAN be, not what it is right now! 

As a local mortgage banker, we specifically offer five variations of the renovation program. There are two types of FHA’s 203k which require a down payment of 3.5%. For our nation's Veterans, there is a VA Renovation option that requires no down payment. Fannie Mae’s HomeStyle option allows for much higher loan amounts than FHA and enables luxury features to be incorporated in your remodel, but still requires only a modest 5% down payment. First Integrity Mortgage has even taken this last product one step further and created a renovation program we refer to as Design Plus.

Design Plus starts with the foundation set forth by our very well-known Power Plus program that combines 1st and 2nd position liens to 1) either avoid costly mortgage insurance without having to make a 20% down payment, or 2) purchase a much more expensive home than conventional lending guidelines allow, all while still producing only a 5% down payment. The Design Plus incorporates Fannie Mae’s HomeStyle Renovation program that provides for a loan amount up to $484,350 (increased for 2019) and a 2nd position lien up to an additional $250,000. In essence, this program can allow a homebuyer (or a current homeowner) to renovate a home with combined loan amounts up to $734,350….all with a 5% down payment (or 5% equity in your current home), no presence of mortgage insurance, AND the rate of both loans are based on the current market 30 year fixed rate. 

Please give First Integrity Mortgage a call today, and we’d be happy to go over these options with you in detail, lay out a timeframe for lending and renovation completion, and get you on your way to having a home in that perfect neighborhood, that’s designed and decorated just the way you want it. 

If you have questions about improving or updating your home or know someone who is and would like more information on any of the renovation loan program, please contact Jeremy Durham at JDurham@firstintegrity.com or 314-856-5626, NMLS# 989777.