Washington, DC · Member since 2017 · 23 posts · 3 votes
I'm new and I'm sure this is ask/answered, but I want to see if I'm looking at this correctly.
Question- is it possible to use a hard money loan for a rehab, then use the equity built up in the rehab to satisfy the loan-to-value requirements set forth by traditional lenders?
I currently have enough capital saved to pay 20% down, but if the scenario above is possible, I could get away with only putting 5-7% down and saving the rest for another deal.
Thank you,
Brian
We have done this before, after ensuring that we are buying with enough equity room. We were able to get a 73% LTV loan with the HML, and then the property appraised high enough to refi into a conventional loan a few months later. I feel like this was a unicorn for us in our market so I don't plan on being able to do this again :)
You still going to need to have down payment for the HML. I'm not familiar with HML to tell answer this part, but I think there is a way to do a HML and then delayed financing on the traditional route to skip the seasoning requirements. If you can't skip seasoning it's 6-12 mo before you get to use the new ARV.