Getting a Loan on Total Loss Home

3 Replies

First of all, I’m new to this! I am interested in purchasing a property that was deemed a total loss by insurance due to a fire. The purchase price is fairly inexpensive, but I’m wondering how I would get financing for reconstruction of a home that is a total loss. I can’t imagine that a bank would provide a loan for that. Or am I wrong? Any suggestions? Thanks!!

Originally posted by @Katie Larson :

First of all, I’m new to this! I am interested in purchasing a property that was deemed a total loss by insurance due to a fire. The purchase price is fairly inexpensive, but I’m wondering how I would get financing for reconstruction of a home that is a total loss. I can’t imagine that a bank would provide a loan for that. Or am I wrong? Any suggestions? Thanks!!

Hi Katie,

 I'm waiting for these to start crossing my desk due to the Santa Rosa / NorCal fires here in the greater Bay Area.

For a 2-4 unit that you will owner occupy, FHA 203k is doable as a renovation loan.

Fora 1 unit, FNMA HomeStyle is doable as a renovation loan.

Both are predicated on NOT being "new construction," which technically it isn't if there's remnants of an old foundation or chimney or something. 

Either way, the sellers need to understand that closing will be a little slower since reno mortgages have far more moving parts. 

But, that's how it's doable. 

That’s really helpful. Thank you!

Hi @Katie Larson  

As Chris mentioned both the FHA 203K or Fannie Mae HomeStyle would be viable options for you when trying to secure financing for a home that is need of any sort of renovations. The biggest recommendation I have for you is to make sure you are working with a loan officer who is proficient in renovation mortgages. You do not want a novice handling this transaction for you.

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