What is a Jumbo Renovation Loan?
Jumbo renovation loans provide funding for basic renovations and repairs such as kitchens, bathrooms, swimming pools, outdoor living spaces, basement/attic finishes, hardscapes (e.g., exterior walls, walkways, etc.) They can be used for repairs required by an appraiser or asked for by the borrower. They cannot address structural issues. The spending must go to items attached to the home that add value to it. The maximum amount for repair or renovation cannot exceed:
- $250,000
- 30% of the completed renovation value
Jumbo renovation loans combine a home purchase or refinance with a renovation outside of the limits of everyday lending. In most states, the cap on "conforming" home loans stands at $453,100. This is the upper dollar limit financed by everyday investors like Fannie Mae and Freddie Mac.
The definition of jumbo renovation loans
Jumbo renovation loans, as the name implies, can be used to pay for and renovate homes of greater value. A higher value home can have higher repair costs. It can be expensive to repair a large plumbing system as a condition of purchase, or renovate a larger kitchen. These expenses can fall upon the person looking to buy the property or upon the current owner looking to refinance.
The Jumbo renovation loan works similar to conventional renovation products – the lender takes the money for purchase or refinance, adds renovation funds, and rolls it into a single home loan. Benefits include:
- 30-year fixed rate
- One balance
- One interest rate
- One round of closing costs
A lender with jumbo knowledge
Investing so much money into a house makes it even more important for everything to be in order. This is the sort of transaction where you should look to a lender experienced in such deals. Please contact a PrimeLending home loan expert near you to learn how a jumbo renovation loan can help you.