Homestyle Rehab loan

Los Angeles County, California
Buying & Selling Real Estate
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Homestyle Rehab loan

Bruce NgPro Member
Member since 2021 · 11 posts · 3 votes

Hi All, 

I'm looking at a duplex in Los Angeles county. It is definitely very old and I am looking at how to do effectively do a live-in rehab. I was recommended a Homestyle rehab loan by my lender but I've never done one of these before. 
There has definitely been a lot of deferred maintenance but it MIGHT be enough to get through acquiring the property and then I can tear a bunch of it out later. I'm thinking I just need to secure the property, get any big ticket structural things fixed and then I am planning on getting the rest taken care of with my own funding. 

As of now, it appears the main thing is an active roof leak (it was leaking when it was raining at showing) 
and there is a wall near that leak that appears to be a bit sunken so we think there's been some settling under the house in the crawlspace.

We have not seen the upstairs unit with a tenant in place.

We also want to move the front door to a different wall so that we can add another bedroom and bathroom but I was thinking we can do that later so that we don't over complicate the initial loan. 

Regarding the offer, how long would you recommend for loan/inspection type contingencies? is 21 days too fast? especially with the holiday season coming? My realtor said we can always ask to extend if we need it. 

Thanks in advance! 

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Ebonie Beaco
Lender · Chicago, IL · Member since 2025 · 204 posts · 101 votes
10mo

I’ve worked with a lot of investors doing live-in rehabs, especially on older duplexes, so here’s how I’d look at this based on what you shared.

A HomeStyle rehab loan can be a great option if you have a clear scope of work and you’re prepared for the extra documentation, contractor bids, timelines, and draw process. It’s a solid loan, but it’s not as simple as “close now, fix later.” With a property this old and with the issues you’ve already identified, the lender may require certain repairs to be included in the rehab portion of the loan rather than letting you handle them afterward with your own funds.

The active roof leak and the wall sinking from possible settling are both items that typically will not pass underwriting unless they’re formally added to the renovation budget. Lenders won’t ignore structural or water intrusion issues — they’ll want to know exactly how and when these will be corrected.

Also, not being able to see the upstairs unit is a concern. You need full access for inspections, appraisal, contractor walkthroughs, and scope approval. If the tenant doesn’t allow access, it slows down the entire financing process, and it’s something you want handled up front in your offer.

Your plan to save the layout changes (moving the front door, adding a bed/bath) for later is smart. Keep the initial renovations focused on structural, safety, and habitability items. Optional redesign work can always come after you close and stabilize.

As for contingencies: 21 days is very tight, especially for a rehab loan and especially around the holidays. These loans require more moving parts — contractor bids, lender review of the scope, inspection coordination, and often additional property condition checks. Yes, your agent can request an extension, but extensions aren’t guaranteed and they can weaken your negotiating leverage.

I would suggest a 30-day contingency period to give yourself room for inspections, contractor walkthroughs, a full evaluation of both units, and enough time for the lender to approve the rehab package without rushing. Rushing a rehab loan is the fastest way to create delays, surprises, and financing headaches.

Bottom line:
– HomeStyle can work, but major issues must be included in the loan.
– You need full access to both units for proper due diligence.
– 21 days is likely too tight — 30 days is a much safer and more realistic window for this type of deal.

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  • Ebonie Beaco
    Lender · Chicago, IL · Member since 2025 · 204 posts · 101 votes
    10mo

    I’ve worked with a lot of investors doing live-in rehabs, especially on older duplexes, so here’s how I’d look at this based on what you shared.

    A HomeStyle rehab loan can be a great option if you have a clear scope of work and you’re prepared for the extra documentation, contractor bids, timelines, and draw process. It’s a solid loan, but it’s not as simple as “close now, fix later.” With a property this old and with the issues you’ve already identified, the lender may require certain repairs to be included in the rehab portion of the loan rather than letting you handle them afterward with your own funds.

    The active roof leak and the wall sinking from possible settling are both items that typically will not pass underwriting unless they’re formally added to the renovation budget. Lenders won’t ignore structural or water intrusion issues — they’ll want to know exactly how and when these will be corrected.

    Also, not being able to see the upstairs unit is a concern. You need full access for inspections, appraisal, contractor walkthroughs, and scope approval. If the tenant doesn’t allow access, it slows down the entire financing process, and it’s something you want handled up front in your offer.

    Your plan to save the layout changes (moving the front door, adding a bed/bath) for later is smart. Keep the initial renovations focused on structural, safety, and habitability items. Optional redesign work can always come after you close and stabilize.

    As for contingencies: 21 days is very tight, especially for a rehab loan and especially around the holidays. These loans require more moving parts — contractor bids, lender review of the scope, inspection coordination, and often additional property condition checks. Yes, your agent can request an extension, but extensions aren’t guaranteed and they can weaken your negotiating leverage.

    I would suggest a 30-day contingency period to give yourself room for inspections, contractor walkthroughs, a full evaluation of both units, and enough time for the lender to approve the rehab package without rushing. Rushing a rehab loan is the fastest way to create delays, surprises, and financing headaches.

    Bottom line:
    – HomeStyle can work, but major issues must be included in the loan.
    – You need full access to both units for proper due diligence.
    – 21 days is likely too tight — 30 days is a much safer and more realistic window for this type of deal.

    2Reply
  • Arman AhmedPro Member
    Real Estate Agent · Columbus Cleveland Dayton, OH · Member since 2024 · 2k+ posts · 969 votes
    10mo

    @Bruce Ng

    Bruce, the safest approach is to focus your initial loan and inspection on securing the property and addressing major structural issues like the roof leak and settling wall, then handle cosmetic or layout changes later. That said, this deal carries a lot of risk with deferred maintenance, tenant occupancy upstairs, and potential overcomplications with moving walls. In the Midwest, you can find properties with similar upside but lower rehab risk, predictable inspections, and stronger cashflow without dealing with high-cost structural surprises.

    [email protected]614-418-6081
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  • Matthew PorcaroBusiness Member
    Lender · Long Island, NY · Member since 2016 · 457 posts · 336 votes
    10mo

    Do you have enough cash plus contingencies to do the work after closing? 

    What kind of structural issues came up? 

    You probably won't get financed on a regular purchase loan without having those addressed. In order to close you would have to use a renovation loan, because you can close as-is. 

    Just because your lender doesn't know how to do HomeStyle loans doesn't mean that's not right for you in this situation. I think a renovation loan is the only way you do this without putting yourself in a tough spot after you close. 

    The 203k Way
    WebsiteView Page
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  • Jonathan KlemmBusiness Member
    Moderator
    Contractor · Chicago, IL · Member since 2016 · 4k+ posts · 2k+ votes
    10mo

    Hometyle or 203k refinance will work great for your situation @Bruce Ng.   Personally, I like the homestyle renovation loan a bit better because it provides a bit more freedom and less "required repairs".

    With the 203k there are certain FHA guidelines that require certain aspects of the property to be fixed. Also, the homestyle allows for a $50k material draw which makes a big difference for your general contractor.

    We do a decent amount of these here in Chicago, so I'm happy to connect and share more of our experience with the renovation loan products.

    Two Other things - PLEASE PLEASE PLEASE make sure the team you hire has worked in renovation loan space before and dont take the low bid.  If you close your loan and don't have enough money to finish, that's the WORST position possible to be in.

    [email protected]
    Quality Builders4.968 Reviews
    WebsiteView Page
    2Reply
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