Two little-known home renovation mortgage programs offer solutions for buyers and homeowners who want to renovate.

Fannie Mae and the Federal Housing Administration have home renovation mortgage programs that allow buyers to borrow based on what the house is expected to be worth after the home rehab is completed.

Homeowners can also use both programs to refinance their existing mortgage plus the renovation costs into one loan. FHA's k program and Fannie's HomeStyle Renovation Mortgage have been around for years.

In the old days -- when most borrowers could easily get second mortgages or generous credit lines to pay for renovations -- these loans weren't as appealing as they are today. Demand surged in the aftermath of the housing crisis, when borrowers saw them as a way to buy and renovate distressed properties. Dustan Shepherd, area manager with Prospect Mortgage in Overland Park, Kansas, says that while demand for rehab loans is up, many borrowers are not aware of the programs, or else they think they are too complicated.

Unlike credit lines, these renovation loans require borrowers to show that the money was spent on the house.

In the standard FHA k program, the borrower hires a consultant to assess the construction plan and to perform an inspection before each draw is made. A "draw" happens when a portion of the money is disbursed to the contractor. Borrowers have up to six months to finish the project and are allowed up to five draws.

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The HomeStyle program does not require a consultant to monitor the work, only an initial and final inspection. Looking for a loan to buy and fix up a house 4 bloodcurdling home-renovation nightmares Why renovate an underwater home Create a news alert for "real estate".

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While rehab loans involve more work than traditional mortgages, they can be a great tool for those who want to buy discounted homes that need repair.

Those who don't have great credit should probably opt for an FHA k.

Most Fannie Mae HomeStyle lenders require a credit score above To get the best rate on a HomeStyle mortgage, borrowers need to have a minimum credit score, Sandoval says. That's because FHA mortgages carry higher mortgage insurance premiums for borrowers who put the least amount down.

FHA k home renovation mortgages have an upfront fee that is rolled into the loan amount. FHA does not set a minimum score requirement for k loans, but many lenders require a score of or greater. There are a few exceptions, and some lenders accept buy used books stockton california as low asShepherd says.

Under the FHA's k program, borrowers can get a mortgage with a down payment as little as 3. HomeStyle requires a minimum 5 percent down payment. The FHA is fannie mae stock worth buying program is available only for owner-occupants.

The HomeStyle program allows binary option working strategy. Another key factor a borrower should consider when deciding whether to go with a k or a HomeStyle home renovation mortgage is the size of the loan.

The k rehab mortgage has to comply with FHA loan limits. You may be able to borrow more with the k than with HomeStyle if you are borrowing up to the local loan limit. With a k loan, borrowers can get up to percent of the home's appraised value, compared with 95 is the new york stock exchange open on columbus day with a HomeStyle loan.

Both appraisals are based on what the house is expected to be worth after repairs. FHA's k rehab loan does not allow borrowers to use the money for strategic stock trading epub items such as adding a swimming pool or a spa, but HomeStyle does.

The streamline k is similar to a standard k but is easier to get and involves less paperwork and less bureaucracy, Shepherd says. Streamline loans don't require the borrower to hire a consultant.

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