Renovation Loans

Ready to upgrade your home?

Alaska Housing provides renovation options covering three possible scenarios:

• Purchase Renovation
  • Renovations in conjunction with a purchase
     
• Second for Renovation
  • Improvements to a home you already own
  • Up to $100,000 w/alternative evaluation
  • Up to $318,075 w/appraisal
     
• Refinance Renovation
  • Incorporates renovations into a new loan.

Who is eligible?

Alaska residents

Eligible Properties

• Owner-occupied single-family residences, duplexes, triplexes, fourplexes, condominium units or Type I manufactured homes may be eligible under all three renovation options.
• Rural non-owner-occupied duplexes, triplexes and fourplexes are eligible under the purchase renovation or refinance renovation option only.

Loan to value (LTV)

LTV is based on the "as-completed" appraised value. Appraisal must address the planned renovation with estimated market value of the home after the renovations are completed.

Cost estimates

Written estimates must be supported by a bid or contract signed by a licensed contractor. Borrowers doing the work themselves must provide evidence of their qualifications to complete the project.

Escrows for completion

50% of the total loan amount, or $75,000, whichever is LESS. A 10% contingency is required for cost overruns. Unused escrow funds are applied to the principal. The term of the escrow may not exceed 180 days. A final inspection is required.

Appraisal

For Purchase Renovation loans an "as-is" and "as-complete" value is required. For Refinance Renovation loans only an "as-complete" value is required. The appraisal must clearly discuss the existing property, renovations proposed and include a discussion of materials used.

Additional considerations

Renovations must comply with state laws regarding contractor licensing & minimum construction standards.

Any addition (new construction) to a property where the original construction began on or after 1/1/92 (energy) or 7/1/92 (inspections) is subject to thermal standards and mandatory inspections. Engineers evaluation may be required.

If an addition is being added to a home built prior to 1992, an engineer’s evaluation or home inspection may be required.

Additions must comply with lot setbacks and not create any encroachment(s).

Approved lenders

To begin, contact an Alaska Housing approved lender to help identify the right option for you.

A list of Alaska Housing approved lenders can be found here: https://www.ahfc.us/buy/resources/approved-lenders

Why renovate?

• May increase your home's value
• Increase energy efficiency
• Incorporate universal design principles to age-in-place
• Improves Alaska's aging housing stock

Purchase renovation example

Purchase price:	$225,000
As-is appraisal:	$225,000
After appraisal:	$260,000
Maximum loan: (95% of final appraised value)	$247,000
Total of repairs: (cabinets, accessibility, flooring, etc.)	$ 27,500
Contingency @ 10%:	$ +2,750
Total:	$ 30,250
Renovation loan amount: (95% of original purchase price)	$213,750
Renovations & contingency:	$+30,250
Final total:	$244,000*

*This example would qualify because the final loan of $244,000 is less than the maximum loan amount of $247,000