“Lenders now more flexible on construction & renovation loans” by Howard K. Stanton


Ever want to build that dream home, but your mortgage lender requires 10% down?   Or want to do a major renovation but don’t have enough equity in your home to finance it? Homebuyers (and homeowners) can now obtain up to 100% of the costs to build a new home or renovate an existing one. Per the “old rules” a lender was only allowed to lend approximately 90% of the actual costs of new home construction or renovation.

NEW CONSTRUCTION: Let’s say you want to buy a $50,000 lot and build a $250,000 home on it.   Your total costs will be $300,000 but your lender will only lend 90% of that, or $270,000. As a borrower, you’ll need to come up with a $30,000 downpayment PLUS closing costs. Under a new program, SunTrust Mortgage is able to lend the full $300,000 in the aforementioned scenario. And we can even include closing costs in many cases.   How?   SunTrust’s lending decision is based on the as-finished appraised value, not the actual cost of construction.    This flexible lending guideline allows you to borrow more and preserve your out-of-pocket cash.

RENOVATION: If you’re planning a major renovation – $40,000 or more- but don’t have that much equity in your home, there is an innovative financing option for you. As long as your improvements will increase the home by the same amount as the cost of  the renovation, you can now borrow 100% of the renovation costs. Your lender and builder can help guide you through the process. It’s never been easier, and it means you can make major improvements with NO cash out-of-pocket.