There are two types of Happy Renovation mortgages: regular and streamlined. Regular are for properties that need structural repairs; streamlined are for those that need only non-structural repairs. Either can be used for Purchase or Refinance.
For the regular Happy Renovation purchase loan, the maximum mortgage amount is based on the lesser of the as-is value of the property plus rehab costs or 110% of the expected value of the property after rehab. This means that you wouldn't want to buy a $150,000 house if it needed $25,000 in repairs unless you had an extra $10,000 in cash, because the most you could borrow would be $165,000. The streamlined loan allows home buyers to add a maximum of $35,000 to the purchase price to pay for improvements.
Eligible Properties
The Happy Renovation loan is intended for owner-occupants, not investors. The following types of properties are eligible:
- Single-family to four-family dwellings
- Existing construction that has been completed for at least one year
- Tear downs, as long as part of the existing foundation will remain
- Moving an existing house to a new foundation
- Rehabbing the residential portion of a mixed-used (commercial/residential) property
- FHA-approved condos
You might be surprised by the variety of home repairs and improvements that can be financed with the Happy Renovation Loan. These include, but are not limited to:
- Painting
- Room additions
- Decks
- Patios
- Site grading and drainage
- Bathroom remodeling
- Kitchen remodeling, including appliances
- Finishing an attic or basement
- Structural alterations and repairs
- Adding or decreasing the number of units in a dwelling (e.g., single family to duplex)
- New siding
- Second story addition
- Elimination of lead-based paint problems
- Heating, ventilation and air conditioning systems (HVAC)
- Plumbing
- Roofing
- Flooring
- Energy conservation
- Disabled access