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Tjjames, Other/Just Looking in Corona, CA

Is anyone familiar with Fannie Mae's Homestyle loan program?

Asked by Tjjames, Corona, CA Sat Aug 13, 2011

I stumbled on some information about the Homestyle program (not to be confused with Homepath). Searching the internet for details, I'm finding conflicting information. Some sites say that an investment property needs 10% down, some say 25%. Same with financing a second home. Some say the renovation must be completed by a contractor, some say you can complete them as do it yourself. And I'm not finding a list of lenders that offer these loans? Would big banks like Wells Fargo, Bank of America, Chase etc offer these or do you have to go to a niche lender?

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Fannie Mae HomeStyle Renovation Loan Highlights:

â– Up to 95% LTV (see LTV matrix below)
â– Renovation funds escrowed in an interest bearing account
â– Soft costs (architectural services, engineering, permit fees, etc.) may be financed
â– Loans are underwritten to FNMA guidelines
HomeStyle Renovation Loan LTV Requirements:

■Primary Residence – Up to 95% LTV
■Second Home – Up to 90% LTV
■Investment Property – Up to 75% LTV
HomeStyle Renovation Mortgage: More Information

Borrowers can basically do any repairs / renovation to the home that they want as long as the appraisal supports the value, the improvements are common for the area (pools, for example), the repairs can be completed within six months, and the repairs do not exceed 50% of the after improved appraised value.
3 votes Thank Flag Link Sat Aug 13, 2011
Although this is outdated, hopefully feedback from a homeowner who has used a renovation loan will help others who might end up here from a web search:

We used a Wells Fargo Purchase and Renovate loan. Although Wells Fargo never mentioned the background details, from what I was able to glean, it sounds like it fell under the FNMA Homestyle program.

I picked Wells Fargo because, frankly, they seemed to be my only option. Other lenders offered FHA 203(k) loans, but since I had 20% down, I didn't want to pay mortgage insurance. I contacted quite a few different lenders and spent hours searching online, and all I found was Wells Fargo. The main downside I saw was the interest rate was 0.5% higher than a normal (non-renovation) mortgage would have been, but the property wouldn't qualify for an ordinary mortgage, and it was still cheaper than mortgage insurance.

The initial experience was generally good. The loan agent was on-the-ball. After he helped us prepare our application, there were additional details to settle with the renovation loan department, including developing a work list and getting contractor bids. That department lost some papers, leading to a bit of extra work, but nothing major. There was some confusion about what permits were needed, but that was the county's fault, not Wells Fargo's.

As work progresses, you don't get any of the money until inspections are conducted, then it is paid out based on percentage completion of each task. Ideally, you advance several tasks a meaningful degree, then request a draw and they send out an inspector. This means you need to either hire a contractor willing to cover material costs up front, or be prepared to reimburse him out of pocket along the way. All work is required to be done by a contractor. No "sweat equity" allowed, so save non-urgent DIY tasks for after the official renovation is complete. Also, they only pay 90% of the value of work completed in these draw requests. The remaining 10% is held back until final project completion.

According to the terms of the loan contract, they respond to a draw request within 2 days. That is true only in legal terms. When you call to start a draw request, the inspector will contact you within 2 days. He'll schedule the inspection within 2 days of that call. The central office will send you the draw documents with the inspection progress to sign within 2 days of that. They'll put the check in the mail within 2 days of receiving the response. Counting a day to get your contractor's signature and potentially spanning two weekends, "within 2 days" can legitimately mean 13 days, although I think I only had one take more than a week. This was frustrating for both me and my contractor.

The big frustration came at the end. Either they never told me, or I missed the fine print, that the final draw request is not paid "within 2 days," but after final approval. That meant additional delays waiting for the post-renovation appraisal and review.

Then they told me we hadn't completed a work item. It was an item they had added as a requirement based on the initial appraiser's report, but never told me of. They insisted they did tell me, even though they could not tell me how they told me. None of the draw requests, which included a list of work remaining, listed it. Nonetheless, they insisted it be done.

At this point, Wells Fargo dropped the ball multiple times. Between shuffling my account between workers, both vacations and sick absences with no one designated to make sure the absent employee's cases were advancing, an actual case of "We lost your file and so no one knew we needed to do anything with it...Gee, it's lucky you called to ask about it," and a full week where they simply sat on our file and couldn't explain why they didn't do anything with it, nearly two extra months passed. Remember this included the final draw request I had expected as normal, in addition to the 10% holdback.

Let me make it more clear - this was money I'd fulfilled requirements for, was already paying interest on, and was expecting at least part of "within 2 days."

I received the check 63 days after I made the request!

I was livid. Worse, I was mortified every time during that two months that I had to explain to my contractor why I couldn't send him his final payment, and listened to him explain he needed it ASAP to pay the rest of his suppliers, who by the end of this fiasco were charging him late fees.

Unfortunately, I can't say "never again." As I said above, there aren't many other options out there.

Instead, I'd advise that if you decide a Wells Fargo Purchase and Renovate loan is what's right for you, be prepared for the worst inefficiencies a bureaucracy has to offer. Make sure your contractor knows they can be slow paying and is prepared to wait for his hard earned wages. Most importantly, be prepared to micromanage Wells Fargo if needed.
7 votes Thank Flag Link Tue Mar 27, 2012
Wells Fargo is the worst!!! They completely dropped the ball on my loan costing me thousands. It was a nightmare!!!!
Flag Sun Jan 11, 2015
I think anyone would find the experience much more professional with us; we have a complete construction and renovation dept - we do FNMA HomeStyle renovation (all 50 states), FHA 203k (TX only); and FNMA HomePath (all 50 states) renovation and one-time close Construction loans (TX only).
- Al Rodenburg - NMLS#: 272775
FLAGSTAR Bank - Home Lending
Sr. Mortgage Loan Officer/CMPS certified
(281) 402-3650
al.rodenburg@flagstar.com
http://www.flagstarloans.com/arodenburg
Flag Tue May 20, 2014
Littile is actually accurately known about renovation lending "on the street." Many borrowers only find their way to me by luck or by referal if they come accross an educated Realtor.

I am a Home Mortgage Consultant at Wells Fargo specializing in only renovation lending. I provide both FHA 203K and FannieMae Home-style. Both allow you to combine the purchase price plus the adjusted rehab budget. Down payment and loan are based on this acquisition value. The power of leveraging allows the first time buyer as little as 3.5% cash in the FHA version, but with adequate credit and sufficient down payment, the FannieMae Home-style opens the door for less or no mortgage insurance AND is available to the investor.

The actual amount of down payment is case specific depending on the type of loan, then credit, type of property, whether owner occupant or investor. It is best to first determine your plans and needs and then your qualification parameters and then choose amongst the options available.

FannieMae Home-style can be as little as 5% down for the owner occupant single family and 20% for the owner occupied multi-fam. The investor may put down as little as 20% on a single and 25% on a multi.

Consider the value of leveraging. With a $200k purchase and $200k in renovations, a single family owner occupant may have a (5% down payment on $400k or $20k in Home-style) or ($14k which is 3.5% in FHA) and get $200k in Home-style renovations done. In FHA, the entire down payment can be gifted; how powerful. The loan best for you depends on many factors including (credit score, credit history, savings and alternative sources of down payment and settlement costs, debt to income ratio, type of home, purpose of home. Speak with a qualified consultant and disclose your characteristics and intentions to find your best solution.

Consider that the investor can highly leverage their own cash for more purchasing power. With a $300k purchase and $200k rehab on a multifamily home, 25% allows for a down payment of $125k. To purchase a property in need of rehab before it can be habitable, the only other alternative is $500k in cash.

I advise anyone interested in either purchasing with a renovation loan or refinancing that they ask lots of questions to give the consultant they are speaking with an opportunity to demonstrate their knowledge and competency (or lack thereof) and to confirm that the lender they represent has the infrastructure to provide these products well. Most do not. Brokers and some banks that say they can originate these loans will approve the loan but still have to find an outlet to sell the loan to. Sometimes they fail with disastrous results. I have picked up the pieces from many failures and brought them to success. I have been astonished to learn some of the things these borrower's have been told.

Reach out to me if you have questions. Jim.C.Bain@WellsFargo.com

FYI Some of the Lenders mentioned in the opening question do not offer renovation financing any more. They have withdrawn from the commitment these loans require. Wells Fargo has embraced the value of these loans for the public who needs these loans. The financial commitment in creating infrastructure exclusive to renovation lending and training consultants and fulfillment staff who focus on nothing but renovation lending shows this commitment.

At Wells Fargo, with 12 years of experience in all forms of lending, I have recently limited myself to only renovation financing. FHA 203k full and streamline as well as FannieMae Home-style. These loans are all I work with day in and day out. My commitment to this lending model and my customers is absolute.
Web Reference: http://www.jimcbain.com
3 votes Thank Flag Link Sun Feb 5, 2012
HomeStyle has not been replaced by HomePath. They are two completely different loan programs, and are both currently available.

At first this link may appear useless but at the very bottom is a "View recorded presentation" link to a PowerPoint presentation which explains a lot about this loan program in an easy to understand manner. https://www.efanniemae.com/sf/mortgageproducts/pdf/hsrenofacts.pdf

For your question about doing work yourself, clip #17 in that presentation, which is 46 seconds, covers those details... it's only permitted on owner occupied 1-unit properties.

Shane Milne | Loan Officer in Orange County, CA | NMLS #81195
Direct local #'s: 949-273-4161 or 646-257-4842
Lending in all 50 states, all types of mortgages
2 votes Thank Flag Link Fri Aug 19, 2011
ang201230, perhaps you should read more carefully. I did not say they are the same program.
Flag Fri May 9, 2014
Geez dude. I'm not even in the business (just a buyer) and even I know that HomePath,
and HomeStyle are two separate programs. HomeStyle has not gone the way of the dodo bird but you sure have.
Flag Thu Mar 13, 2014
Fannie Mae HomeStyle Renovation Loan is no longer available:
■Primary Residence – Up to 95% LTV
■Second Home – Up to 90% LTV
■Investment Property – Up to 75% LTV
â– Renovation funds escrowed in an interest bearing account
â– Soft costs (architectural services, engineering, permit fees, etc.) may be financed
â– Loans are underwritten to FNMA guidelines

it has been replaced by HomePath:
http://www.homepath.com/financing/index.html

HomePath Renovation Mortgage allows a borrower to purchase a property that requires light to moderate renovation. The one loan amount includes both the funds for the purchase and renovation - up to 35% of the as completed value, no more than $35,000.

Benefits to You, the Borrower

•Low down payment and flexible mortgage terms (fixed- rate or adjustable-rate).
•Down payment (at least 3 percent) can be funded by the borrower’s own savings; a gift; a grant; or a loan from a nonprofit organization, state or local government, or employer.
•Renovation amount based on appraisal “as completed” value.
•No mortgage insurance; ask your lender for cost details on loans without mortgage insurance.
•Expanded seller contributions for closing costs allowed.
•Available for primary residences, second homes, and investment properties.
•Many condo project requirements are waived; ask your lender for details.
•For more information about the renovation process, contact a HomePath Renovation Mortgage lender.
2 votes Thank Flag Link Sun Aug 14, 2011
HomePath is a totally separate program from HomeStyle...
Flag Thu Jan 23, 2014
You must be thinking of Homepath Renovation... it is 3% downpayment for owner occupied SFR... and 25% for owner occupied duplex... and yes the worok has to be done by a licensed contractor... it is also true that FHA 203K offers a better alternative, because you can still put 3% down up to 4 units...

I am currently doing a deal like this on a duplex... I am both the broker and the contractor... we decided to go with 203K instead of homepath renovation...

Best of luck!

Ron Escobar, MBA
Broker & General Contractor
2 votes Thank Flag Link Sat Aug 13, 2011
Can you use the FHA homestyle loan and once the rehab is complete sell the property?
1 vote Thank Flag Link Wed Oct 9, 2013
yes you can
Flag Thu Nov 7, 2013
for the love of god, HomePath and HomeStyle are two completely different loan programs!
1 vote Thank Flag Link Mon Sep 9, 2013
We have the Homestyle Renovation Loan Product up to 95% LTV Primary, 1 unit Investor 75% LTV.
1 vote Thank Flag Link Mon Jul 22, 2013
Thank you everyone for this thread. My partner and I have found a home that we want to bring back to it's former glory here in the SF Bay Area. However, it is a short sale and we have been having much difficulty getting information on our options for financing renovation costs. We've been told everything from 'our only option is home equity line of credit' to 'California no longer allows including renovation costs in home loans'. We have good credit and decent down payment amount (approx. 10%). I would welcome any assistance or references for someone I can talk to about this.

Thank you!
1 vote Thank Flag Link Tue May 1, 2012
I do BOTH Fannie Mae HomePath Renovation loans AND FannieMae HomeStyle.

Shane is right. They are two completely different programs and both have amazing features.

Please reach out to me if I can be of assistance. I would be delighted to help!

Brent Kluge

Renovation Finance Expert
Web Reference: http://www.203kworld.com
1 vote Thank Flag Link Sat Oct 1, 2011
Try FNMA 866 442 8576, they may help locate lenders
1 vote Thank Flag Link Sat Aug 13, 2011
Hello Tjjames,
What kind of project do you have in mind? Have you considered FHA 203K Rehab program? Nowadays, rates are record low, for example around 4 fix 30 yrs. For more info about this program click http://tinyurl.com/rehab203k

Please let me know .

Doug Perez
(323) 285-8864
1 vote Thank Flag Link Sat Aug 13, 2011
Thanks Andrea. An answer here from Ron states that the program is no longer available. Do you know if any lenders are still offering the Homestyle program? Have you had any clients that have closed with one? How long ago?
1 vote Thank Flag Link Sat Aug 13, 2011
It sounds great;
One loan that includes the Renovation money,
Owner/Occ or Investors,
Only 5% down

there appears to be only one problem;

That Program is not currently available.
1 vote Thank Flag Link Sat Aug 13, 2011
Allan,

From what I can tell, Homepath and Homestyle are definitely two different programs.
1 vote Thank Flag Link Sat Aug 13, 2011
Think you may mean HomePath Program
1 vote Thank Flag Link Sat Aug 13, 2011
Tjjames is right, two different loan programs.
Flag Mon Sep 9, 2013
We do both the HomeStyle and the HomePath renovation loan at PrimeLending. The required downpayment is based on the occupancy type. Will the home be a primary residence, second home, or investment property? Feel free to email me for further info jsmith@primelending.com

713 Pear Orchard Rd. #203
Ridgeland, MS 39157 Jeffrey Smith
Loan Officer
Direct: 601.572.1688
Text: 601.572.1688 Fax: 877.764.7081 NMLS: 439801
jsmith@primelending.com
http://jeffrey.primelending.com
0 votes Thank Flag Link Tue Sep 9, 2014
FannieMae HomeStyle (renovation) loans are available for Purchase or Refinance transactions.
LTV up to 95% on a Primary residence - Loan $ calculated by using either the :
a. purchase price plus renovation cost
OR:
b. after renovated value
(which ever is lower)
Example:
$ 200,000 purchase price
$ 50,000 renovation costs
$ 270,000 value, after renovation
Loan would be calculated using $ 250,000 x 95% = $237,500 loan amount

For more details, please email: al.rodenburg@flagstar.com or Call: (281) 236-5743
- Al Rodenburg, Sr. Loan Officer - CMPS Certified - NMLS# 272775.
Flagstar Bank - lending in all 50 states.
p.s. lower LTV for 2nd homes and investment properties
0 votes Thank Flag Link Sat Jul 12, 2014
I can assist with the Homestyle renovation loan - in all 50 states. For more information, you can reach me at: alfer.rodenburg@flagstar.com or call: (832) 924-3219
notes: up to 95% financing; one loan 50% of after value, upto $200k.
0 votes Thank Flag Link Thu Jan 23, 2014
Good information and accurate below. I'm work for Lincoln Capital and provide the Fannie Mae HomeStyle renovation in GA, TN, NC, FL, & CO.
H Ben Cox
0 votes Thank Flag Link Mon Nov 18, 2013
Hi Elektrolyte79 - if the home isn't owned by Fannie Mae (i.e. not eligible for HomePath financing) then a pretty popular loan program that can include rehab costs is FHA's 203(k) program. With the FHA 203(k) as little as 3.5% down payment is required on the purchase price + cost of rehab. There are two versions, the streamline version which caps rehab project costs at $35k, and then there is the full version which will finance over $35k in rehab project costs (as well as allow improvements that require an engineer). You can read more details on the FHA 203(k) program at http://portal.hud.gov/hudportal/HUD?src=/program_offices/hou… and it's also been discussed within this thread if you read the other answers.

Shane Milne | NMLS #81195 | Lending in all 50 states
0 votes Thank Flag Link Tue May 1, 2012
The Fannie Mae HomePath Renovation Loan allows for borrowers to purchase properties that require little to adequate renovations. Fannie Mae HomePath allows for borrowers to have both the purchase and renovation amount wrapped into one single loan. The maximum loan amount for moderate renovation is up to $35,000 in repairs or up to 35% of the future value.

The HomePath mortgage requires a minimum down payment of 3% versus 3.5% required for an FHA mortgage and both of the loan programs allow the down payment to be “given” to you under approved circumstances.

The Fannie Mae HomeStyle program is intended for homebuyers who are interested in purchasing a home in need of moderate renovation or simply for homeowners who already own a Fannie Mae approved home and would like to have it undergo renovations may try and qualify for additional funds through this program.

With the HomeStyle Mortgage, the minimum loan amount is $50,000 and the maximum loan amount is in reference to the conforming loan limit ($471,000). Repairs and renovations must be completed within 6 months and cannot exceed 50% of the after improved appraised value.
Flag Wed Sep 11, 2013
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