Embarking on a renovation journey often brings a blend of excitement and a bit of anxiety, especially when it comes to financing the project. Freddie Mac’s CHOICERenovation® Loan is here to bridge the financial gap, making your dream home a reality. In this article, we’ll walk you through securing a home renovation loan using the Freddie Mac CHOICERenovation® program, shedding light on why it might be your go-to choice.
What Is The Freddie Mac CHOICERenovation® Loan?
The Freddie Mac CHOICERenovation® Loan is a conventional loan tailored for those looking to either purchase a new home needing some TLC or refinance their current home to fund renovation projects. This loan is unique due to its flexibility in covering structural repairs and luxury renovations, standing out among other loan products. With a low down payment requirement, a variety of properties are eligible, making it a robust choice for a broad spectrum of homeowners.
What Are the Key Features of The CHOICERenovation® Loan?
The CHOICERenovation® loan is a blend of flexibility and inclusiveness. Here’s a snapshot of its features:
- Up to 95% Loan-to-Value (LTV) of the “as-completed” value.
- A minimum of 5% down payment (3% if you’re a First Time Home Buyer or opting for a Home Possible loan).
- Eligibility for structural repairs and luxury items like pools or outdoor living areas.
- A variety of property types are eligible including Single Family Residence, PUDs, Condos, and 2-4 Unit Primary Residence.
These features make the CHOICERenovation® loan a versatile financing solution for a myriad of renovation aspirations.
Freddie Mac CHOICERenovation® Loan Requirements
- Program Type: Conventional (may be combined with Home Possible®)
- Loan Purpose: Purchase/Refinance
- Down Payment: 5% Minimum (3% down if a first-time buyer or using Freddie Mac’s HomePossible® loan. If refinancing, existing mortgage must be a Freddie Mac owned or securitized loan.)
- Structural Repairs: Allowed
- Luxury Items: Allowed*
- Occupancy: Primary Residence, 2nd Homes, Investment
- Property Types: Single Family Residence, PUDs, Condos, 2-4 Unit Primary Residence
- Minimum FICO: Per LPA
- Contingency Reserve: Minimum 10%, up to 20%
- Number of Draws: 5 draws maximum
- Materials Draws Allowed: Yes
- Minimum/Maximum Repair Amounts: No min. repair amount; $50,000 max Manufactured Homes
- Pool Program: Simplified process for pool installations!
View mortgage rates for
December 5, 2023
View mortgage rates for December 5, 2023
Comparing Freddie Mac CHOICERenovation® with Other Renovation Loans
When venturing into the realm of home renovations, having a clear understanding of the different loan options available is crucial. Government-backed loans like the FHA 203(k), VA, and USDA renovation loans have more stringent restrictions on property types and the nature of renovations, albeit with lower or zero down payment options.
Here, we outline the distinctions between the Freddie Mac CHOICERenovation® loan and other prevalent renovation loans:
FHA 203(k) Loan
- Down Payment: As low as 3.5%
- Property Types: Primarily 1-4 unit properties, with some restrictions
- Renovation Types: Both minor and major renovations, but luxury items typically not allowed.
Fannie Mae HomeStyle® Renovation Loan
- Down Payment: As low as 3%
- Property Types: Variety, including primary residences, second homes, and investment properties
- Renovation Types: Broad range, including luxury items.
VA Renovation Loan
- Down Payment: Zero down payment for eligible veterans and service members
- Property Types: Primary residences
- Renovation Types: Minor alterations and repairs.
USDA Renovation Loan
- Down Payment: Zero down payment in eligible rural and suburban areas
- Property Types: Primary residences
- Renovation Types: Essential repairs for health and safety.
Frequently Asked Questions
Can I Include Luxury Renovations in My Loan Amount?
Absolutely! The CHOICERenovation® loan allows for luxury items, enabling you to transform your space into a lavish oasis.
How Does The Loan Term Impact My Monthly Payments?
The loan term will significantly impact your monthly payments. A longer-term results in lower monthly payments, but higher interest over the life of the loan.
What Credit History Do I Need to Qualify?
Your credit history is crucial as it influences your loan approval and interest rates. A better credit score can unlock more favorable terms.
Your Next Steps
The Freddie Mac CHOICERenovation® loan is a gateway to making your home a reflection of your style and needs. With expert guidance from JVM Lending, you are in the best hands to ensure you reach your goal of a better living space filled with possibilities. Our dedicated team is here to ensure your financial decisions are sound and the loan you choose is tailored to your circumstances.