Homepath Financing

22 Replies

Can anyone explain how homepath financing works? I see a lot of advertisements as 5% down. Is this for owner occupants and investors as well? If not for investors what's the % for Homepath? I've researched homepath website for this information but haven't received any clear guidance.

I am new to homepath myself but my understanding is you can put less down for owner occupant homes such as 5%. Search "homepath" on the site and you should see a fairly good amount of input on how it works.

HomePath is 3% down for owner occupied and 10% down for investors.

You can also do Purchase/Renovation for O/O and N/O/O. 97% or 90% LTV of As Completed Value or S.P. plus rehab cost which ever is less. 1 - 4 units and 2nd hm, and some condos. Great loan if you can fine something on the site that interest you.

@Ralph E. Could you please break that down. I'm not clear on your abbreviations and how it breaks out.

Vallejo is one of my favorite places.

@Patrick Tutwiler and @Sherwin Riley sorry for using industry lingo. First let me make a correction in that owner occupied purchases required a 5% down payment.

O/O is for owner occupied meaning you're purchasing to live in the property. N/O/O is for non owner occupied purchases meaning you won't live in the property but purchasing as a investor.

LTV stands for Loan to value, a ratio of the outstanding debt on a property to the market value of that property.

S.P. means Sales Price and As Completed Value is the current market value of the property all fixed up. Also known as ARV or As Repaired Value.

2nd hm is for Second Home. Considered a second property that you would have that's used for vacation or live in if you lets say you're bi-coastal.

HomePath Mortgage allows a buyer to purchase a Fannie Mae-owned property with a 5% down payment (as of November 16, 2013), no lender-requested appraisal and no mortgage insurance. Expanded seller contributions towards closing costs are allowed. Available for owner occupants and investors

HomePath Renovation Mortgage allows a buyer to purchase a property that requires light to moderate renovation. The one loan amount includes both the funds for the purchase and renovation — up to 35% of the as completed value, no more than $35,000. Available for owner occupants and investors.

I hope this is clear.

Thanks @Ralph E. I wasn't sure of some of those abbr's. Good explanation.

As an investor, I love HomePath financing for FannieMae foreclosures! Only 10% down payment for an investor but you will have a slightly higher interest rate. No appraisal required. I used HomePath three times and it has been a smooth process.

Ralph E. and Johnson H. -- you say "only 10% down" and I want to believe that. But my understanding -- and please correct me if I"m wrong, I'm new to this -- is that that's only if the HomePath purchase is your first investment property. But for subsequent investment properties -- #s 2, 3, 4, 5, 6... -- you have to put more than 10% down. Plus you can borrow less because your LTV is lower. Yes, no, maybe?

For your first four mortgages, purchasing a SFH FannieMae foreclosure with a Homepath investor loan is 10% down. I have purchased three properties this way. You will qualify for your loan based on your income, so with a higher loan to value, you qualify for less thereafter until the rental income hits your tax return.

With a higher LTV, your interest rate will be slightly higher than if you put 20% down.

However, if you don't believe me, the best way to confirm is to talk to a lender. You should get preapproved so that your agent knows you're serious about buying.

Johnson H., thanks. I hav spoken with a lender who's candidly told me that he's not entirely sure, and that requirements are always changing. I already own four properties, three condos, which I rent out, and my primary residence, a town home. But none of these are HomePath properties. So, when you say four properties, do you mean four financed properties, regardless of whether they're HomePath or not, or do you mean four HomePath properties?

John, I stated first four mortgages. To clarify, I meant convertional mortgages and not portfolio mortgages. Yes you are correct that this is regardless if it is HomePath or not as a Homepath loan is considered conventional financing. Mortgages 1-4 can be a Homepath mortgage with 10% down as an investor. 5-10 will be a higher down payment. This can change over time, but this is my understanding currently.

Per conventional lenders, I have found that many of them don't deal with investors and only usually work with owner occupants. It is even more difficult to find a lender knowledgeable with mortgages 5-10 and even harder for 11-20 per FannieMae guidelines. If the lender you are talking to isn't sure, I would move on to another lender.

Originally posted by @Johnson H. :
As an investor, I love HomePath financing for FannieMae foreclosures! Only 10% down payment for an investor but you will have a slightly higher interest rate. No appraisal required. I used HomePath three times and it has been a smooth process.

You have to be careful with FNMA homepath "no appraisal". i have seen where they over price the homes drastically and the require "no appraisal" because they know the home is over priced. Here is an article I wrote about it a while ago: FNMA Homepath Overpricing REO's then financing them with "No Appraisal"

Originally posted by @Robert Adams :
Originally posted by @Johnson H.:
As an investor, I love HomePath financing for FannieMae foreclosures! Only 10% down payment for an investor but you will have a slightly higher interest rate. No appraisal required. I used HomePath three times and it has been a smooth process.

You have to be careful with FNMA homepath "no appraisal". i have seen where they over price the homes drastically and the require "no appraisal" because they know the home is over priced. Here is an article I wrote about it a while ago: FNMA Homepath Overpricing REO's then financing them with "No Appraisal"

Good call on that. Seems like every FannieMae property I've seen in Phoenix in the past year has been over priced.

Can someone clarify whether Home Path is the same thing as a FHA loan like the 203k or whether it's an entirely different program? Can someone also clarify the eligibility restrictions for which properties can be financed this way. Finally, if financed & utilized originally as o/o with the smaller down payment, is it required to refi if you later decide to transition the property into a rental unit?

@Johnson H.

Nice replies. I work with investors in the Kansas City market. Many of them have had interest in doing a 10% HomePath mortgage, but we have been unable to locate a lender on their list that will actually provide this. Can you share which institution you have been able to get these HomePath houses through?

Originally posted by @William Robison :
@Johnson H.
Nice replies. I work with investors in the Kansas City market. Many of them have had interest in doing a 10% HomePath mortgage, but we have been unable to locate a lender on their list that will actually provide this. Can you share which institution you have been able to get these HomePath houses through?

Thanks William. The lender I worked with with me is with AmeriFirst Financial in Tempe, AZ. You can find a list of HomePath lenders on their website here.

http://www.homepath.com/financing.html

Originally posted by @Trevor Schumann :
Can someone clarify whether Home Path is the same thing as a FHA loan like the 203k or whether it's an entirely different program? Can someone also clarify the eligibility restrictions for which properties can be financed this way. Finally, if financed & utilized originally as o/o with the smaller down payment, is it required to refi if you later decide to transition the property into a rental unit?

Trevor, it is a different program. Only FannieMae foreclosures listed on HomePath.com can qualify for a HomePath loan if it is mentioned so. You can refinance later on but you will need enough equity for a conventional investor loan to do so.

Originally posted by @William Robison :
@Johnson H.

Nice replies. I work with investors in the Kansas City market. Many of them have had interest in doing a 10% HomePath mortgage, but we have been unable to locate a lender on their list that will actually provide this. Can you share which institution you have been able to get these HomePath houses through?

Aimloan.com will do it in every state. However, they are not very easy to deal with.

Cheap Ways into houses:
0% Down:

NACA (https://www.naca.com)
VA Loan (http://benefits.va.gov/HOMELOANS/index.asp)

3.5% Down
VHA (http://portal.hud.gov/hudportal/HUD?src=/topics/buying_a_home)

3.5% AND Renovations
VHA 203k loan (http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/203k/203kabou)

5% Down
Homepath Owner Occupied

Not as cheap, but come with renovation options attached to the loan:
10% Down
Homepath Investment (SFH only)

20% Down
Homepath Investment (Duplex only)

25% Down
Homepath Investment (3-4 Unit Buildings)

@Aaron Montague Nice links, another really good source of information on 203K loans is

http://203kcontractors.com/faqs#min_max_repair_amount

We are currently pre-approved for the 203K Loan, going with the Standard/Full Loan Package, just hunting the perfect deal. Yes, it does require a little more paper work with the FHA, need to have the 203K Consultant involved and handle inspections/appraisals and such, but the fact that I can get into a property, have up to 6 months of mortgage payments included in the cost of the loan so that we don't have to worry about double rent/mortgage payments, rehab my primary residence the way we like it, save a 1930-1940's era farm house, and then refi into a conventional cash out mortgage later on and use that equity to go buy rental properties.......nice way to get started, without having to put up a lot of cash or live next to tenants/in town (I'm a RURAL kinda guy). You can also go the Streamline route, less hassle/paperwork, more for the little cosmetic rehabs for a primary residence, but probably not as much equity out on the refi, all depending on the property and location of course.

Excellent @Chris Gillins . Thank you for the 203k link.

Were you able to do any of the work yourself? I noticed "Carpenter" under your job title.

Is the 10% down option for investors over?

Great post Ralph E.  I have used HomePath Renovation loans. They are a great product and all the investors I have worked with have gotten great returns on their money using the loan product. 

The only problem that I encountered was that many lenders do not offer the product or those who do, process so few of the loans that the process gets delayed. 

I'm sure the industry has changed a bit since I last used a HomePath Renovation loan and I know that lenders and mortgage brokers who are familiar with these loans can process them efficiently. 

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