Austin rehab loans can help first-time home buyers and even property investors fix up residential residences. There are three major types of federally backed home renovation loans, but fortunately, there are still a variety of options available through regional Banks and credit unions that might be more suitable for particular situations. Read on to learn more about the most common types of Austin rehab loans.
Austin rehab loans are offered in structures, including those backed by the federal government, those offered through regional Banks and credit unions, and through private lenders. However, the most well-known are the FHA 203k loan, the HomeStyle loan by Fannie Mae, and the CHOICE Renovation loan by Freddie Mac. All three are for remodeling residential properties, but each has a more particular purpose.
For instance, the FHA 203k loan can only be used for a primary residence. Therefore, it does not allow for renovations on a second home or investment property. Additionally, work must begin immediately after closing, and there is a minimum credit score for approval, along with a down payment, that ranges from 3.5% to 10% or more.
Meanwhile, Fannie Mae’s HomeStyle loan can be used for a second home or vacation property, along with an investment property. But, like just about any other federally backed loan, the renovation work must be necessary to improve the functionality of the house and not for luxury items, for example, adding a swimming pool.
The choice renovation loan by Freddie Mac is primarily designed to renovate an out-of-date property, which makes it a great choice for first-time homebuyers who find a property that is in great need of some TLC.