Renovation FAQ

1. What is the minimum down payment required on a renovation loan?
   It depends on the selected loan and qualifying program. We have programs that have down payments for eligible borrowers. Please contact me for more information.
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2. What is the minimum amount I can borrow for a renovation loan?
   Some programs require a minimum of $5,000 in repairs while other programs have no minimum requirements. If you have less than $5,000 in repairs, however, renovation financing may not be your best option.
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3. When can the work begin?
   Work can begin as soon as the loan closes and the loan proceeds have been disbursed. All work must begin within 30 days of the loan closing.
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4. Can I get money before the work begins?
   Upfront funds are not disbursed on renovation loans. Funds are disbursed after work has been completed and inspected. The only exception to this policy is for flooring, cabinetry and windows that are not in stock have to be ordered with an up-front deposit. A copy of the supplier's invoice is required, and the check is made payable to the supplier for the deposit (maximum 50% of the item's cost). The remaining funds for the item are not released until after the item is received, installed and inspected.
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5. How long do I have to complete the renovation?
   Work must begin within 30 days of closing, cannot stop for periods greater than 30 days, and must be completed within six months of closing. There are, however, certain programs that will allow up to nine months if the cost of repairs exceeds $50,000.
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6. Can I do the work myself to save money?
   The use of a general contractor is strongly encouraged and is a requirement on some programs. Depending on the loan program, however, a customer who possesses the time, ability, tools and assets to perform the work may be allowed to do so. This is reviewed on a case-by-case basis. With no exceptions, licensed contractors must perform certain repairs, such as electrical, plumbing, roofing, and HVAC.¹
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7. Can I be reimbursed for materials I purchase outside the work listed in the work write-up?
   Your renovation escrow account is based on the scope of work detailed in the work write-up. The only time a reimbursement can be made is if a change order is submitted and approved prior to the additional work being performed. Any work performed outside the scope of work escrowed is your responsibility if the change is not approved.
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8. Can I use a renovation loan to renovate a condominium?
   Yes. Certain restrictions apply to condominiums, such as limiting the work to interior renovations, the number of units in the project, and the number of units undergoing renovation at one time.
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9. Do I need a home inspection if I'm getting a renovation loan?
   You always have the option of obtaining a home inspection in addition to the inspection made by the approved consultant.
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10. When do I start making my mortgage payments?
    Payments are due and payable as disclosed on the promissory note signed at the loan closing.

     

    

    If the property is not habitable during the renovation, up to six months of payments can be financed based on the consultant's estimate of the time required to complete the work. In this instance, payments would be due from the customer on the first day of the month after the property is habitable or upon the completion date.

    

    The maximum number of payments that can be financed is six, and only if the property is not habitable. Any mortgage-financed mortgage payments that are not needed will be applied to the principal balance of the loan after the final draw is processed and the renovation account is closed out.
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11. What happens to the 10% contingency reserve if it's not used by the end of the renovation?
    It can either be used to do additional repairs, if approved by the draw center, or applied to the principal balance of the loan. If you didn't finance the contingency reserve, it can be refunded in cash.
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12. If I don't use all the money set aside for repairs, can the money be given back to me in cash?
    Only funds that you paid for repairs, clearly identified as being paid in cash during the loan process, can be given back at the completion and closeout of the renovation account, if the account has some residual funds. Any remaining residual in your account will be applied against your loan's principal if not used for additional repairs at completion.
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13. If I'm building my house and run out of construction funds, can I use the renovation loan to complete the home?
    We have a program that allows you to finance the completion of a home. The home must, however, be close to completion.
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14. What happens if something goes wrong while the repairs are in progress, such as a bursting pipe or the discovery of rotted wood?
    Your contingency reserve is used to handle any unforeseen repairs. The approved consultant would complete a change order form executed by all parties and send it to the draw center for approval before the completion of any additional work. Once the change order is approved, the necessary work can then be completed. The funds will be released after the consultant has inspected the completed work.
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15. Can I move into the home as soon as the loan closes?
    Yes, as long as the home is habitable, as per local regulations, and no mortgage payments have been financed.
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16. I'm building my house and have run out of money. Can I use a renovation loan to complete the construction on my home?
    No, renovation loans are only available for existing homes.
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