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The Fannie Mae HomeStyle Mortgage

Mortgage Library: Types of Mortgage Loans: Fannie Mae HomeStyle Mortgage

HomeStyle Mortgage offers borrowers of all income levels up to 90 percent financing for the purchase and improvement of a home. Financing is based on the "as-completed" appraised value of the home, and borrowers can use up to 50 percent of that value for improvements or repairs.

Fannie Mae does not specify which improvements a borrower may or may not finance. This means that the improvement funds can be used for "cosmetic" purposes such as carpeting and various kinds of remodeling. There is no minimum amount that needs to be spent on repairs. The improvements should be performed by contractors who are licensed, registered, or certified or have the highest level of certification required.

HomeStyle Mortgage: Benefits

  • Qualify for loans based on the as-completed value of the property.
  • Improve your home at low first mortgage interest rates.
  • Do almost any type of improvements or repairs.
  • Finance up to six months of mortgage payments to cover non-occupancy costs during construction.
  • Lender involvement in construction oversight and monitoring provides added value to borrowers.

HomeStyle Mortgage: Key facts

  • This mortgage is available to owner-occupants, purchasers of second homes and investors.
  • Eligible properties are one- to four-unit homes, condominiums, and PUDs.
  • Maximum loan amount may not exceed Fannie Mae's conforming loan limits.
  • Maximum renovation amount is 50 percent of the as-completed value of the property.
  • Qualifying ratios are 28/36.
  • Loans are fixed-rate mortgages or rate capped ARMs, fully amortizing with terms between 15 and 30 years.
  • A contingency reserve equal to 10 percent of the cost of the renovation is required, and may be financed out of the loan proceeds.

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