Fannie Mae Homestyle Renovation Loan

7 Replies

I am buying and renovating a double wide mobile home as an investment rental. I came across the home style loan online. Has anybody used this loan product to renovate a mobile home? Curious what parameters they have for DIY repair as well as how they determine ARV and LTV. Any input is greatly appreciated! Thanks BP!

@Reid Levy...no I didn't.  The lenders I spoke with were not able to approve it on a Mobile Home property.   Unfortunate but not unexpected I guess.  It is a challenge getting debt in place on these types of homes.  Looking into self financing through a self-directed 401K now.  

Originally posted by @Reid Hanley :

@Reid Levy...no I didn't.  The lenders I spoke with were not able to approve it on a Mobile Home property.   Unfortunate but not unexpected I guess.  It is a challenge getting debt in place on these types of homes.  Looking into self financing through a self-directed 401K now.  

Reid, do you mean that you want to use your 401k to finance this investment for you? If that it s the case this would be prohibited transaction according to the IRS rules.

Originally posted by @Dmitriy Fomichenko :
Originally posted by @Reid Hanley:

@Reid Levy...no I didn't.  The lenders I spoke with were not able to approve it on a Mobile Home property.   Unfortunate but not unexpected I guess.  It is a challenge getting debt in place on these types of homes.  Looking into self financing through a self-directed 401K now.  

Reid, do you mean that you want to use your 401k to finance this investment for you? If that it s the case this would be prohibited transaction according to the IRS rules.

What I mean @Dmitriy Fomichenko is that I am looking into setting up a self directed 401k that I could use to purchase this property as an investment.  I'm aware I can't benefit directly in the purchase, rather my 401k has to benefit.  I still have much to learn about the allowed and prohibited transactions, but I'm doing my research now.

@Reid Hanley ,

It seems that you might be putting cart before the horse. You can't be buying a mobile home with the 401k plan that doesn't exist yet. You can't even put the property under contract. Some people think they can get the property under contract, then setup self-directed 401k, fund it and assign contract to the 401k. This is considered self-dealing and would violate IRS rules. 

The proper way would be to establish 401k plan first, fund it, then look for a property, sign the contract in the name of the 401k, pay earnest money deposit from the 401k account, arrange financing if needed and close on the property taking the title in the name of the 401k. 

You also mentioned "DYI repair" - this would not be allowed either. You and your immediate family members are considered "disqualified party" to your 401k and are not allowed to provide any services to the plan, receive any benefits from it or be involved in the transaction in any other way. All transactions of the 401k must be "arms length".

And lastly, self-directed 401k plan is not for everyone. While anyone can set up a self-directed IRA, to be eligible for Solo 401k you must have legitimate self-employment activity or own a business with "earned" income.

Hope this helps! 

Thank you @Dmitriy Fromichenko.  That is all very good advise and well explained.  I'll be in touch to discuss this further with you.  Thank you for the very informative video as well.  Hope others have seen this...Solo 401k really well explained!

Thank you too @Justin Windham.  I'm aware of this feature and was thinking of possibly using a solo 401k loan to attain the property.  Not decided yet.  We are still shopping for traditional financing.