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Remodel Mortgage

Prime 1 Bancorp, LTD offers access to the best rehab/remodel mortgage on the market.  The HomeStyle® is the only product on the market available that will allow you to rehab a property and get a one time close loan with a rate slightly above market rate based on a future value after rehab.  If you are looking for a mortgage to remodel, rehab mortgage, homestyle mortgage, in California, Colorado, Florida, Illinois or Alaska then you have come to the right place.  Below is a brief description of our product offering.

HomeStyle® Renovation Mortgage

The HomeStyle® Renovation mortgage provides a convenient and economical way for borrowers considering moderate home improvements to make repairs and renovations with a single-close first mortgage, rather than a second mortgage, home equity line of credit, or other, more costly methods of financing. The HomeStyle® Renovation mortgage permits borrowers to include financing for home improvements in a purchase or re-finance transaction of an existing home. HomeStyle Renovation provides a convenient way for borrowers to make renovations, repairs, or improvements totaling up to 50 percent of the as-completed appraised value of the property with a first mortgage, rather than a second mortgage, home equity line of credit, or other, more costly financing method. Eligible borrowers include individual home buyers, investors, nonprofit organizations, and local government agencies.

Borrower Benefits:

* Cost-effective way to renovate or improve a home with rates slightly over prime rate

* Single mortgage means lower closing costs and less hassle than doing 2 loans

* Loan amount based on “as-completed” value of the home or the cost basis (purchase money loans), whichever is less so even if you don’t have equity you can qualify off the future value when rehabbed.

* Better option than a HELOC as you can use a future rehabbed value and Heloc’s use today’s value


Product Overview

The HomeStyle Renovation is a single-close loan that enables borrowers to purchase a home that needs repairs, or refinance the mortgage on their existing home and include the necessary funds for renovation in the loan balance. The loan amount is based on the “as-completed” value of the home not the present value.

Loan Purpose Purchase or limited cash-out refinance

Loan Type/Term 15- and 30-year FRMs and all eligible ARM products


Borrower Eligibility

One- to four-unit principal residences, one-unit second homes, or one-unit investor properties including units in condos, co-ops, and PUDs. No manufactured housing.

Any type of renovation or repair is eligible, as long as it is permanently affixed to the property and adds value. Renovations should be completed within a twelve-month period from the date the mortgage loan is delivered.


Loan Limits-  $75,000 min to $424,100 or Max conforming for the county Limit


Property and Renovation Eligibility

Eligible borrowers include individual home buyers, investors, nonprofit organizations, or local government agencies.

Nonprofit organizations must provide additional documentation so that lenders can assess the viability of the nonprofit to repay the particular mortgage.

Underwriting Desktop Underwriter® (DU®) and manual underwriting permitted. DU Approve/Eligible recommendations only.


Calculating the LTV and Maximum Mortgage Amount

For purchase transactions, loan-to-value (LTV) ratio is based on the lesser of: 1) purchase price and cost of renovation, or 2) the “As-Completed” value.

For refinance transactions, the LTV ratio is determined by dividing the original loan amount by the “as completed” appraised value of the property.

Limited Cash-out Refinance – Maximum Loan Amounts

For limited cash out refinance transactions (LCOR), the LTV ratio is determined by dividing the original loan amount by the as completed appraised value of the property.

Borrower may not receive cash back at closing in any amount (Fannie Mae standard limited cash-out refinance of 2% or $2,000, whichever is less, is NOT PERMITTED for this product).

Maximum LTV/CLTV/HCLTV (at Origination using DU*)

The following are maximum LTV/CLTV/HCLTV for purchase or LCOR when HSR mortgages are underwritten with DU* (note that borrowers can also qualify for up to 105% CLTV with eligible Community Seconds®):

* One-unit principal residence to 95% LTV/CLTV/HCLTV with FRM; 90% with ARM

* Two-unit principal residence to 85% LTV/CLTV/HCLTV with FRM; 75% with ARM

* Three- and four-unit principal residence to 75% LTV/CLTV/HCLTV with FRM; 65% with ARM

* One-unit second homes to 90% LTV/CLTV/HCLTV with FRM; 80% with ARM

One-unit investment properties:

* Purchase up to 85% LTV/CLTV/HCLTV with FRM; 75% with ARM

* LCOR up to 75% LTV/CLTV/HCLTV with FRM; 65% with ARM

*For properties underwritten manually, credit score and other factors will determine LTVs. Refer to the Eligibility Matrix.

Subordinate Financing Standard subordinate financing and Community Seconds are permitted. Refer to the Eligibility Matrix.

Hazard and Mortgage Insurance

Borrower must have hazard insurance in place to cover the estimated as-completed value of the home after renovation. Mortgage insurance, if required based on the applicable LTV calculation, must be in place before closing.


* Borrower must choose his or her own contractor to perform the renovation.

* Lender must review the contractor hired by the borrower to determine if they are adequately qualified and experienced for the work being performed. The Contractor Profile Report (Form 1202) can be used to assist the lender in making this determination.

* Borrowers must have a construction contract with their contractor. Fannie Mae has a model Construction Contract (Form 3734) that may be used to document the construction contract between the borrower and the contractor.

* Plans and specifications must be prepared by a registered, licensed, or certified general contractor, renovation consultant, or architect. The plans and specifications should fully describe all work to be done and provide an indication of when various jobs or stages of completion will be scheduled (including both the start and job completion dates).

Borrower “Do-It Yourself” Work

Borrowers can perform the renovation work themselves at the lender’s discretion, provided that:

* The Do-It-Yourself financing does not exceed 10% of the as-completed value. Note: Inspections are required for all work items that cost more than $5,000.

* The property is a one-unit owner-occupied home.

* The reimbursement is limited to the cost of materials or the cost of properly documented contract labor (sweat equity may not be reimbursed).

Renovation Costs, Payment Reserves, and Contingency Reserves

Renovation costs are limited to 50% of the “as completed” appraised value of the home. Renovation costs may include:

* Labor and materials.

* Soft costs (architect fees, permits, licenses).

* Contingency Reserve (10% of the cost of labor, materials, and soft costs for unforeseen extra costs in the renovation). The 10% contingency reserve is optional unless the property is a 2- to 4-unit home.

* A payment reserve of up to six months PITI is permitted when the borrower must vacate the property during renovation. The amount can be financed in the loan amount if the value will support such financing. The reserve is allowed only for the period in which the property is uninhabitable due to the renovations.

* A contingency reserve of 10% of the hard and soft renovation costs is required for two- to four-unit properties; the contingency reserve may be financed or it may be funded separately by the borrower.