Buying on a Budget? Finance Your Dream Home with a HomeStyle Renovation Mortgage
"Fewer Homes for Median Earners," "The Fight to Keep Teachers in Tech Hubs from Being Priced Out," and "Housing Market Slows, as Rising Prices Outpace Wages," are just a few of the headlines from last year that may leave would-be homebuyers feeling stuck without options. That sense of helplessness resonates even more during National Homeownership Month when there is an increased discussion about providing both first-time and repeat homebuyers with affordable mortgage options.
According to a recent National Housing Survey® analysis on consumer affordability perceptions, two-thirds of renters say that owning their own home makes more economic sense, while the same share believe it would be difficult to get a mortgage. Moreover, using the Mortgage Lender Sentiment Survey® our economists found that programs designed to help borrowers cover renovation costs were cited by lenders as the second most helpful idea (behind only low down payment mortgages) to enhance housing affordability for low- and moderate-income homebuyers.
Fortunately, renovation options are available to address the reality of severe shortages of affordable housing in many communities.
Fannie Mae has designed its HomeStyle® Renovation loan product to help lenders provide maximum flexibility and simplicity for those who have found a home they can afford but that still needs some level of renovation. Such homes typically have lower price points and are more affordable. Opening up options for fixer uppers allows potential homebuyers to find the right home, at the right price, and with more inventory to consider.
Additional benefits of HomeStyle Renovation include:
- The ability to draw money upfront to begin renovations and improvements without having to spend out-of-pocket.
- There is no restriction on the type of renovation – homeowners can use the funds to make design updates, add an accessory-dwelling unit, commonly known as in-law suites or basement apartments, or replace a roof.
- A HomeStyle Renovation mortgage can be combined with a HomeReady® mortgage so low-income borrowers can take advantage of features such as better interest rates, lower down payment, and cancellable mortgage insurance.
- HomeStyle Renovation offers borrowers competitive rates, which may be lower than other renovation financing options, such as FHA's 203K program, HELOC, or costly credit cards.
Each new homebuying decision must factor in two things. First, finding the right home at the right price, and, second, finding the right loan to make homeownership sustainable. For those homebuyers willing and able to work on finding a home they want and can afford, there are lenders who have the products at hand to help them find a loan that meets their long-term needs.
Vice President, Product Development and Affordable Housing
June 19, 2019