HomeStyle® Loan Program for Home Improvements & Repairs
HomeStyle® Renovation Program
The Pennsylvania Housing Finance Agency offers the HomeStyle® Renovation program which allows eligible homebuyers purchasing a home or existing homeowners seeking a refinance mortgage to repair, remodel, renovate or complete energy improvements. Qualified borrowers can fund up to 75% of the "as completed" appraised value of the property. This allows buyers to make needed repairs right away, without having to take out another loan at a higher rate and with a shorter repayment period. This program can be used in conjunction with the HFA Preferred™ and the HFA Preferred Risk Sharing™ programs. For Manufactured homes, repairs are limited to the lesser of 50% of the "as completed" appraised value, or $50,000.
The HomeStyle® Renovation program may be combined with PHFA’s Keystone Advantage Assistance Loan, as applicable. Two-unit properties are not eligible for this program.
The home improvement must be permanently affixed to the property and add value to the home.
Common repairs include:
- Roof repair/replacement
- Installation or improvement of heating and/or air conditioning systems
- Upgrades to kitchen and/or bath areas
- Repairs/improvements to plumbing and/or electric systems
- Addition of living space
Luxury amenities such as: swimming pools, tennis courts, hot tubs/Jacuzzis, saunas or other recreational or entertainment facilities, are not eligible.
All repairs must be completed by a qualified and licensed contractor. If the local government (city or municipality) does not require contractors to be licensed, proof of their liability insurance must be supplied and included with the contract. Borrowers may not act as their own contractors, unless that is their profession.
The contract must contain the following items:
- A description of the specific work to be completed. This must be supported by specifications, drawings, photos, etc.;
- A statement of the actual maximum amount that can be charged (not estimated amount);
- A release of lien clause to maintain clear title;
- The contractors agreement to complete the work in compliance with all applicable building codes and zoning restrictions and to obtain the necessary permits;
- The borrowers and the contractors signatures and date.
It is up to the buyer to provide the lender with a written request detailing the required improvements/repairs to be completed, along with the estimates, specs, contracts, etc., from a qualified and licensed contractor(s). The lender will provide the buyer with the HomeStyle® Renovation Consumer Tips Form and the Contract Profile Report to review and sign. The borrower must fund any amount that exceeds the as approved appraised value.
The lender is responsible for reviewing the borrower written request and specs, contracts, etc., to determine the credibility and legitimacy of the proposed repairs and/or improvements, and to ensure the contract contains all the necessary items as listed above under the section titled The Contract. Also, the lender will ensure that the funding of any additional costs do not jeopardize the buyers debt to income ratios or PHFA's lien position, nor do they cause the purchase price limit to be exceeded.
The lender will submit a signed Contractor Profile Report provided by the participating lender with specs, contract(s), etc., to PHFA when they submit the pre-closing package. The lender should select HomeStyle® on the top of the 51 Pre-Closing Package Checklist - PURCHASE. The lender must provide the appraiser with the contract and supporting documentation so the as completed value of the property can be determined.
At closing, the lender will escrow the repair funds and will thereafter monitor the completion of the repairs and issue draws, if applicable, using the appropriate PHFA forms. An initial draw in an amount up to 25 percent of the total repair cost may be issued at closing. The checks for each draw must be signed by both the borrower and the contractor. PHFA will purchase the loan according to the normal schedule, which will usually be prior to the completion of the repairs.
This program is also covered in Chapter 3 of the Seller's Guide.