To be used on Conventional loans for either required or optional repairs.
- Repairs MUST be permanently attached to the property and add value.
- May not be structural - exceptions are roofing and minor foundation repairs
- MOBILE/MANUFACTURED HOMES are now allowed with restrictions & Maximum repairs are limited to the lessor of $35k or 10% of appraised value + financed renovation fee's
-620 FICO Minimum (660 High Balance)
-95% LTV 1 Unit
-80% LTV 2 Unit
-75% LTV 3-4 Unit
Second Homes and Investment Properties (MINIMUM LOAN AMOUNT- $30K)
-620 FICO Minimum (660 High Balance on Second Home only)
-1 Unit - 80% LTV Purchase Only (75% LTV Refinance)
-2-4 Unit Investment Properties now eligible (75% LTV purchase/refinance). Standard Conforming Loan amounts only, NO High Balance.
- Second Homes and Investment Properties are limited to 4 financed properties (Including Primary Residence) No Limit for Primary Residence.
- No Cash Out Allowed.
- Second home - minimum of 2 months
- Primary and investment property - 2-4 unit properties require a minimum of 6 months reserves
Allowable Repairs or Renovations
- Repairs/improvements must be permanently attached to property and add value
- Cosmetic repairs only
- "Built-in" kitchen appliances
-Conversion of 2-unit to 1-units
-Conversion of 1-unit to 2-unit by exception only. Borrower must have prior landlord experience or qualify without rental income
Renovation Cost Limits
- Up to $35,000 in repairs/improvements
- This includes the 10% contingency reserve
- Loan amount calculation is Sales Price + Bid + Contingency Reserve ONLY
- Renovation fees CANNOT be rolled into the loan amount unless it is a REFINANCE and LTV permits.
Note: If cost of renovations exceeds 35k, the Borrower/Seller is NOT allowed to pay the difference at closing from their own funds. If maximum amount is exceeded use HomeStyle Renovation program.
A contingency reserve equal to 10% of the total costs of the repairs/improvements must be established and funded for all mortgages to cover required unforeseen repairs or deficiencies that are discovered during the renovation.
- Contractor is selected by the borrower and approved by the lender
- Contractor validation will be completed by the Renovation Department
- Maximum of three (3) contractors
- General Contractor is preferred but not required
- Follow state and local requirements for licensing of contractor(s). If a general contractor is not licensed for work that requires a license (i.e. plumbing, electrical, HVAC, etc.) obtain:
- proof of the general contractor's liability insurance coverage of at least 2 times the total bid, OR
- the license of the sub-contractor completing the work.
- “Do-It-Yourself” Projects are NOT acceptable even if the Borrower is a licensed contractor.
- Contractor on the project CANNOT be one of the following. (NO EXCEPTIONS):
- Borrower's employer
- Members of Borrower's family
- Realtor involved in transaction
- Loan Officer involved in transaction
TEXAS PROPERTIES ONLY - It is important to remind the borrower that their contractor(s) will be required to attend closing
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