The Creative Investor - Renovation Mortgage from Fannie Mae

The HomeStyle® Renovation Mortgage lets you buy a home and repair or improve it with just one loan. You can also use it to refinance an existing mortgage to fund improvements or repairs to the home you currently own. The loan amount used for renovation may be as much as 50 percent of the as-completed appraised value of the home.

Key Features
For home purchases, you can borrow more than the current value of the home -- the loan amount

is based on the lesser of either the project costs or the "as-completed" value of the property, up to 95% loan-to-value for one-unit, owner-occupied properties.

A first-mortgage interest rate is applied, which is lower than the home equity or second mortgage rates typically associated with home improvement financing.
Virtually any type of improvement or repair is eligible.

This mortgage is available for one- to four-unit primary residences and one-unit second homes or investment properties, including condominiums.

You can choose a fixed-rate mortgage with terms of 15 to 30 years or an adjustable-rate mortgage (ARM).

You can finance up to six months of mortgage payments for owner-occupied properties to cover non-occupancy costs during construction. For example, if you have to spend six months renting an apartment while your home renovation takes place, you can roll those expenses into your loan amount.