Info on Construction Loans to Purchase Property
I've found a couple of deals that look well priced, but obviously the house will need a little work. I haven't looked much into construction loans, but have heard (if your ARV is right) that the loan can cover pretty much all of the costs needed to fund the loan. I don't have a ton of funds on hand to cover significant down payments, so I was just wondering if there's any truth to this or if I need to look in a different direction.
Also, any general info on this type of loan and thoughts on it's viability is appreciated as well.
Hi @Nick Lockard, the loan you are likely looking for is a renovation loan.
If you qualify for conventional, you should look at Fannie Mae Homestyle with 5% down.
If you qualify for FHA, you should look at FHA 203k with 3.5% down.
You can tear down to the foundation and rebuild with a renovation loan.
They have better rates and are generally easier than construction loans.
Then, you will likely have equity so you can refinance and remove PMI or take some cash out if you have enough equity.
Hope this helps! Let me know if I can be of any assistance.
Thanks for the info that helps a ton!
- Lender
- Fort Worth, TX
- 6,120
- Votes |
- 7,765
- Posts
@Nick Lockard I wanted to provide some clarification here - if you are looking to buy this property as an investment property, an FHA loan cannot do that. A 5% down Homestyle loan cannot do that. Those are only for primary homes. I'm saying this because Bigger Pockets is mostly for real estate investors....but there's some different things that happen too. So if you are buying a primary home - then yes, those can work. If you are buying an investment property, like a rental, then you would need something different. Can you share with us what type of a property this would be?
-
Lender Texas (#392627)
- Guaranteed Rate
Hey @Andrew Postell
This would be an investment property. Not currently looking to move out of my primary residence, so I'm just trying to get info on any products that could help out.