If you are applying for a loan program that allows you to finance the cost of renovations along with the purchase or refinance of a home, such as the HomeStyle Renovation Mortgage from Fannie Mae, or the NACA Mortgage from the Neighborhood Assistance Corporation of America (NACA), you will need to get an appraisal that provides an “as completed” value of the property after the renovation work is done.

To get an appraisal for these programs, you will need to provide the appraiser with a detailed scope of work that outlines the planned renovations, including the materials, costs, contractors, permits, and timelines. You may also need to provide plans and specifications from a licensed contractor, renovation consultant, or architect. The appraiser will then use this information to estimate the value of the property after the improvements are completed.

The appraisal requirements may vary depending on the type and extent of the renovations, the loan-to-value ratio, and the number of units in the property. For example:

• For HomeStyle Renovation Mortgages, the maximum allowable loan-to-value ratio is 97% for 1-unit properties and 75% for 2-4 unit properties. The maximum allowable renovation funds are 75% of the lesser of the purchase price plus renovation costs, or the “as completed” appraised value. Manufactured housing is eligible with a cap of $50,000 or 50% of the “as completed” appraised value for renovation funds.

• For NACA Mortgages, there is no down payment or closing costs required, and the interest rate is below market. The maximum loan amount is based on the affordability of the borrower and the “as completed” appraised value. The property must meet NACA’s Minimum Property Standards and pass a home inspection.