Home Improvement and Construction Loans

There are many options available for financing home improvements not to mention using cash or available funds.

What type of program is used may depend on the scope and amount of funds needed for the project. We can help you with everything from a home equity line of credit where you can do the work yourself or a full construction loan if you’re working with a vacant lot or a complete tear-down property. Larger projects may require a general contractor and/or to have the contractor approved by the lender.

Loans that do not require a general contractor are our home equity line of credit, stand-alone second mortgage or a cash-out refi. With the home equity loan of credit or second mortgage, you could keep your existing first mortgage (if there is one).

Here are some possible programs to consider:

Home Equity Line of Credit/Second Mortgage:

• Home equity line of credit with a variable rate for a specific loan amount that can be drawn on and repaid over time. There are varying terms for the repayment. Second mortgages have a fixed rate/payment for a specific amount of time.
• Funds from a home equity loan are available to use for just about anything you want.

Cash-Out Refinance

• Loan to value limited to 80% of appraised value and maximum conforming loan limits.
• Funds from the cash-out refi are available for any use.
• More streamlined of a process than the renovation loan (below).

Conventional Renovation Loan:

• Maximum loan to value is 97% for owner occupied; 90% for second homes and 85% for investment property-purchase or 75% if the investment property is a refinance.
• Conforming loan limits: $977,500 for King, Pierce and Snohomish County (single family dwelling). NOTE: JUMBO Renovation Loans are available too!
• 2-4 unit homes available (different loan to values apply) for owner occupied, primary residences only.
• 1 unit investment property allowed with max LTV of 85%.
• ADU/DADU’s are permitted for owner occupied, primary residences.
• Licensed contractors and/or subcontractors must be used where licensing is required per state or local regulations for the specific trade or type of renovation that is being completed.
• Often used for remodel projects and luxury items may be included. Cannot be used for a complete teardown however, One-Time-Close can facilitate this.
• Allows access to upfront equity based on the after improved value of the home.

One-Time-Close Construction Loan:

• This is a true construction loan that would for a new build of a primary residence from the lot up. A person can already own the land or this can be combined with purchasing the land.
• Conforming/FHA loan limits: $977,500 for King, Pierce and Snohomish County. VA Loans available. (Jumbo program also available).
• Eligible property types include 1-unit site-built homes, modular, multi-wide manufactured homes, pre-hab. ADU/DADU permitted WHEN it’s part of a 1-unit site-built home.
• Primary residences and second homes (conventional financing).
• Builder must be approved.
• Interest-only payments during construction phase (up to 12 months) which then modifies to a 30-year fixed mortgage.

We also have FHA 203(K) and VA Renovation Loans available.

You don’t have to have perfect credit to take advantage of these programs to either make your existing home your dream home or if you’re looking at buying a home could use some improvement.

If you would like to review possible scenarios for your home, please reach out to me!