Use Renovation Loans to Upgrade Your Home or Build Your ADU

You can use this type of renovation loan to purchase a new property, or refinance the current home you own.

This program can go across the traditional conventional to government VA or FHA financing. Guidelines are similar with the addition of having construction loan built in.

As low as:

• 0% for VA loans

• 3.5% for FHA loans

• 3% for conventional loans

First-time buyer criteria may be required

Temporary rate buy downs may be offered on new purchases

• 2-1 buy down

• 1-0 buy down

• Primary and second home only

• License, bond, insurance ($1MM min) (or local issuing authority requirements), and a current W9

• Contractor Profile Report (Form 1202)

• Including demonstrated experience in renovation lending and a minimum of three references of similar work in cost and nature completed within the last 12 months.

• Document a demonstrated financial ability to sustain projects.If mold abatement, lead-based paint abatement, or radon abatement, the contractor must be licensed under those specific trades.

• May run a background report on contractors.

• Only one general contractor is allowed.

• Up to five draws are allowed.

• Draws are advanced only upon completion of work as evidenced by HUD Consultant inspection

• Draws will not be approved for work that is not yet complete, including not yet installed materials.

• Lender will set up an interest-bearing repair escrow account, to fund the remaining disbursement. Any interest is applied as principal reduction to the loan.

• Lien Waivers must be provided at the time of each draw. FNMA Form 3739 may be used.

• If an occupancy certification is required, this must be provided prior to the issuance of the Finance Release Notice.

• A 10% holdback is requirement on each draw release. The total of all holdbacks may be released only after the final inspection and issuance of the Final Release Notice is received from the borrower, HUD Consultant and inspector, as applicable.

• Lender will order a final inspection by the original appraiser.

• Title must be cleared before the final draw.

• Funds will be made available via a two-party check payable to the borrower and contractor.