Building an addition: anyone have familiarity with Homestyle?

Question

I own a property in Great Barrington, Massachusetts. I will be building a separate living space and connecting it to the primary dwelling. Officially, it will be deemed an "attached accessory dwelling unit." I'm considering the standard Homestyle loan and am wondering if anyone has had experience using this loan to build either an attached ADU or an addition.

Stephanie Medellin · Answer

@Amy Turnbull If it's a one unit owner occupied property, there's a good chance you won't need reserves, but it will be up to automated underwriting. If you do, it will most likely be either 2 months or 6 months reserves.

Amy Turnbull · Answer

Thanks, I've been over it and over it. So many variables i.e. will I have to have reserves? Think I'll just have to take the plunge!

Amy Turnbull · Answer

Rumor has it the Homestyle loan will accept detached ADUs--no longer necessitating the charade of "addition." Still, the requirement for an investment property to only have one unit continues to be a conundrum. It's almost like Fanniemae got this wrong when they went to print: you can have an owner-occupied 1-4 unit, but only a one unit investment property? Anyone in New England have a Homestyle lender to recommend who can help me?

Michael Synclare · Answer

I’ve been learning about Homestyle loans recently and I wonder why non-owner-occupied multifamily properties are not eligible. What difference does it make to the lender if I live there full-time or not?

Could I just use my own money to do the renovation conversion to a two or three unit property a few years after the original renovation is complete? What other ways can I accomplish getting from a SFH to a Multi using a reno-loan like this? Thanks.

Amy Turnbull · Answer

Thanks for the replies here. I'm still hot on the trail of trying to find the most creative way to finance my ADU. Language in the Homestyle documents says I can do any kind of renovation as long as it is fixed to the property. So I think it will come down to whether an ADU is a renovation or new construction. Then there's the "one unit" thing. I believe an ADU or an addition (which is probably what I'll call it since that is a familiar term to lenders) is classified as a single unit.

If you have any familiarity with this type of loan, please weigh in here! Thanks!

Stephanie Medellin · Answer

@Amy Turnbull

Here is some basic info...

https://www.fanniemae.com/content/fact_sheet/homes...

Amy Turnbull · Answer

I have had the property for only a year so I need the after repair value appraisal to fund the project. So many questions about this loan!

Chris Mason · Answer

If you have the equity and don't need the ARV appraisal, you will get a better deal with a vanilla cash out refinance. Otherwise, yup, FNMA HomeStyle is probably the way to go.

Building an addition: anyone have familiarity with Homestyle?

Building an addition: anyone have familiarity with Homestyle?

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