Got a quick newbie question for you all.
Lets say I got approved for a loan and everything went smoothly throughout escrow.
Question: Am I allowed to get a loan lets say 30000 above property purchase price so i can have some money to rehab before I rent it out?
How does this work usually. Or what is the most profitable way to do this? And if i do need 15000 to rehab, would I need to add that money to closing cost + downpayment or will that be a part of the loan section when doing a deal analysis?
Thanks in advanced!
It depends on your loan type FHA probably won't let you buy anything that needs rehab. FHA 203k will include it in the loan. Conventional would be something you do on your own and not rolled into the mortgage unless you put more than the minimum amount down.
Yes you can do this typically a commercial lender or private lender is how this is done assuming it’s not your own cash
Often hard money.
@Peter Bui , the FannieMae HomeStyle Renovation Program would be great for this! The FHA 203K isn't the only program out there!! And I definitely wouldn't recommend hard money.
Simple answer is yes there are programs out there that are not hard money. Both the conventional HomeStyle and the FHA 203K would give you that option. It sounds like you are making this property an investment property so the FHA 203K would not be an answer because you are required to occupy the the home (a multi-family home is ok if you occupy one of the units). Which leaves you with the HomeStlye. The HS loan allows you to finance all rehab monies needed into one loan and your downpayment is based on the total price of the home (purchase price + rehab budget). If it is an investment property you can only do single family homes, no multi-family homes with this program. The downpayment requirement is 15% as well and it is your end loan so you dont have to refinance out of it like you would typically with hard money or construction loans.
I hope this helps.
@Bill Rich would I still be charged the the PMI if i don't reach the 20% down?
@Peter Bui if you are doing an FHA 203K yes you would have PMI regardless of how much you are putting down. If you are doing the HomeStyle yes you would avoid PMI you put down 20% or more.