What is a HomeStyle loan, and can it pay for renovations?
(Photo : Bidvine from Pexels)

If you're thinking of fixing up your home, you may want to do your research first before you jump into the first offer you spot. There are a lot of options that you can take a look at when it comes to fixing a home. Each of them has its own pros and cons.

One of the less chosen options when it comes to these types of financing solutions are HomeStyle loans. If you're looking for extra money to improve your property, you can always consider this as a first option. But what exactly are HomeStyle Loans? What can they do for you? Can this pay for renovations? 

Find out everything you need to know right here:

If you've never heard of a HomeStyle loan before, these are actually mortgage loans backed Fannie Mae. Loans like these make home financing more economical and way more convenient. 

These are usually available with lower interest rates compared to personal loans and home equity credit lines. The lender will also take into account the property's projected value. This means that there's a chance for you to get a higher loan if your property has a higher appraisal.

What Can You Use a HomeStyle Loan For?

A HomeStyle loan is excellent for renovating properties and homes. Whether you're an existing homeowner, a homebuyer, or a real estate investor, HomeStyle loans are a convenient way to get the money to improve your home. 

These, however, also come with restrictions as well as a few requirements. An example is a need for more documentation than usual.

How Does a HomeStyle Loan Work?

HomeStyle loans can help you decide whether you're looking to add funds to buy a new home or renovate it. You can also use it to refinance a current mortgage, so it includes the cost of any renovations you do on your property.

The terms of HomeStyle loans can vary from one debtor to another. But to give you an idea, there are the so-called adjustable-rate loans. There are also optional fifteen, and thirty-year fixed-rate loans.

What Does a HomeStyle Loan Cover?

If you're wondering what you can do with a HomeStyle loan, the funds can actually be used on any necessary renovations on the property. It can also be used on luxury changes and upgrades. Some great examples are saunas and bathtubs.

These can also be used with the HomeStyle Energy Program. This gives you rewards for any home upgrades that you make that are connected to water and electricity efficiency. 

Advantages and Disadvantages of HomeStyle Loan

One of the advantages of the HomeStyle loan is that it has a competitive interest rate. It also has a very tempting low downpayment. For example, if you're a new home buyer who purchased a residential property, you can avail of a 3% down payment.

The downside is that you aren't allowed to use the loan money for any structural changes. It also can't be used on updating parts of the home that aren't attached to the property.

Read next: 5 Items You Must Include in Your Lease Agreement