Waco Home Renovation Loans

If you’re in the market for a new home to live in or invest in Waco, purchasing a fixer-upper is a unique option with significant benefits. In addition to buying the house at a lower price, you can also increase its value by remodeling it to its “full potential.”

However, these renovations can be expensive, often costing thousands of dollars. Moreover, a standard mortgage will not cover these costs. How, then, can you pay for the renovations if you wish to purchase a home and remodel it? That’s where rehab loans come in. 

What Are Rehab Loans? 

A rehab loan finances the home’s purchase price and any needed or wanted repairs in a single loan. With a rehab loan, you don’t have to worry about having enough money to complete the repairs of your home. You won’t have to spend your savings or use a high-interest credit card to pay for home improvements.

Types of Home Renovation Loans

Are you planning to utilize a rehab loan for a home improvement project or purchase a fixer-upper property? You have three options to choose from:

• FHA 203(k) Loan (Limited or Standard)
• Fannie Mae’s HomeReady Loan

• Freddie Mac CHOICERenovation Loan

1. FHA 203(k) Loan 

With an FHA 203(k) loan, you can borrow the amount you need based on how much your house is expected to be worth after the renovations. With one loan, the loan lets buyers pay for the house and the repairs (up to $35,000 worth). Many first-time homebuyers have regarded the 203(k) as their stepping stone to homeownership by allowing borrowers to finance the cost of repairs into their mortgage. 

2. Fannie Mae HomeStyle Renovation Loan

The Fannie Mae HomeStyle loan is another option for a rehab loan. A conventional renovation loan allows home buyers to pay the cost of buying and remodeling a home with the same loan. 

There are some similarities between the HomeStyle loan and the FHA 203(k), but there are also many significant differences. The biggest difference is that FHA 203(k) loans can only be used for primary residences, while HomeStyle loans can be used for second homes or investment properties. This, along with the loan’s stricter requirements, earned the Homestyle loan a reputation as a superior alternative to the FHA 203(k) loan for qualified first-time buyers.

3. Freddie Mac CHOICERenovation Loan

The CHOICERenovation mortgage from Freddie Mac enables borrowers to purchase and renovate homes without needing two separate loans, thereby reducing closing costs by thousands of dollars. It also allows existing homeowners to refinance, including renovation costs in the new loan amount.

The HomeStyle Renovation Loan and the CHOICERenovation program are similar in many ways. However, the CHOICERenovation mortgage program allows you to finance resilience items like disaster-proofing your home, whereas the HomeStyle loan option does not.

Rehab Loans: Which One’s the Best For You? 

Renovating your home can be challenging and very stressful, but paying for it doesn’t have to be. Capital Home Mortgage has several rehab loan offerings for you depending on your financial and lifestyle needs. 

Whatever rehab loan product you choose, you can count on us to offer you competitive interest rates and mortgage terms. Capital Home Mortgage has the expertise, tools, and resources to expedite the entire process and make your home-buying experience as pleasant as possible. Call our Renovation Mortgage Team at (800) 850-4255 now.