Homebridge is updating and providing additional guidance to the HomeStyle program guidelines as detailed below.
Updates to Current Guidelines
- Purchase transactions only (currently rate/term refinance allowed)
- 1-unit properties only (currently 2-4 units allowed)
- Minimum credit score is 680 (currently DU determines credit score)
- Maximum repair amount is $150,000 (currently no maximum)
- The Streamline Option has been updated to require a minimum of one (1) energy efficient improvement with an Energy Star designation. Energy improvements may include, but are not limited to, hot water heaters/tankless water heaters, dual pane windows, heating or cooling systems, low flow water fixtures (shower heads, faucets, toilets, etc.) insulation, appliances, etc.
- The one time material draw allowed at the beginning of the project is the lesser of:
- 10% of the total hard cost of the project, or
- 50% of the material cost on the work write-up (previously 50% of the material cost was allowed)
- Transactions approved to finance up to 6 months of the PITI payment due to the property being uninhabitable during the renovation process will be required to obtain a Builder Risk insurance policy
Additional Contractor Requirements
- In addition to Homebridge current contractor requirements the following additional requirements apply based on the project’s direct hard costs:
- Project costs $15,000 to $35,000: The contractor must provide evidence they have been licensed and insured for the previous 12 months (measured from application date)
- Project costs $35,001 to $75,000: The contractor must provide evidence they have been licensed and insured for the previous 24 months (from application date) AND evidence of a 2 year history of completing similar projects
- Project costs $75,001 to $150,000: The contractor must provide evidence they have been licensed and insured for the previous 36 months (from application date) AND evidence a 3 year history of completing similar projects AND have a minimum of 25% of the direct project costs in an available line of credit and/or cash
Projects with Repair Amounts ≥ $75,000
- In addition to the additional contractor requirements detailed above, projects with a repair costs ≥ $75,000 to $150,000 are also subject to:
- A Builder Risk policy is required, unless written confirmation is received from the insurance company, that will be insuring the subject property, stating they have reviewed the appraisal and the final score of work and will issue the property insurance policy without any property related exceptions.
- A 6 month policy is required for direct hard project costs < $100,000
- A 12 month policy is required for direct hard project costs ≥ $100,000
- Soft costs (architectural drawings, engineering fees, permits, etc.) are only reimbursable once the permits have been received by the RCD. No funds will be released from the escrow account until the permit(s) are provided
- If a zoning change or variance is required, the approvals must be obtained and provided to the RCD prior to loan closing
- If the subject property is a designated as a historical property which requires the local authority to approve the work, the approval must be obtained and provided to the RCD prior to loan closing
- If the transaction is a combination of HomeStyle and HomeReady, and there is an accessory unit, any rental income from the accessory unit cannot be used for qualifying (HomeReady allows rental income from accessory unit; projects < $75,000 that are combining HomeStyle/HomeReady may continue to use rental income from the accessory unit for qualifying
- The appraiser must include in the appraisal addendum any repairs that are required to meet fire, health, and safety and/or any other repairs required for the property to meet Fannie Mae minimum property standards
- A Builder Risk policy is required, unless written confirmation is received from the insurance company, that will be insuring the subject property, stating they have reviewed the appraisal and the final score of work and will issue the property insurance policy without any property related exceptions.
Loans submitted on or after Monday, December 14, 2020 will be required to meet the following new requirements as detailed above: 1-unit purchase transactions only, and minimum 680 credit score.
All other updates are effective immediately and apply to new submissions and loans currently in the pipeline.
The Homebridge HomeStyle guidelines have been updated and posted on the Homebridge website at www.HomebridgeWholesale.com
If you have any questions, please contact your Account Executive
