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Renovation Loans For Single & Multi-Family Primary & Investment
HomeStyle Renovation Financing
***** Please NOTE for Renovation Loans - You Must Have 4 Or Less Financed Properties, Including Subject Property!
Above are links with information on these Renovation Loans. The EZ (C) Renovation Loan is the only loan that offers financing on multi-family investment properties. Please see below as well. Feel free to PM, call or email me, as well!
My sole business is focused on assisting investors with purchasing their primary homes as well as investment properties.
Product Overview
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
Primary Homes
-1-4 Units
-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.
Reserve Requirements
- 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
Conversions:
-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.
Contingency Reserve
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 Validation
- 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
- Borrower's employer
- Members of Borrower's family
- Seller
- Realtor involved in transaction
- Loan Officer involved in transaction
HomeStyle Renovation Loan
Product Overview
- Combines home purchase or refinance (limited cash out) with home improvement financing in one loan with one closing
- Provides a convenient way for borrowers to make renovations, repairs, or improvements totaling up to 75% of the "as-completed" appraised value of the property with a first mortgage, rather than a second mortgage, HELOC, or other more costly financing method.
- Funds can be used for repairs or renovations that are permanently affixed and add value to the property.
- Primary residences as well as second homes and investment properties are eligible.
- Maximum of 4 financed properties including subject property, on second homes and investment properties. No limit on primary residences.
- NO MOBILE/MANUFACTURED HOMES
BOND/DPA NOT ALLOWED EXCEPT COMMUNITY SECOND DPA UP TO 100% CLTV.
Required LTV's:
Primary Homes:
-1-4 Units
-620 FICO Minimum (660 High Balance)
-97% LTV 1 Unit with standard conforming only and buyer must be a first time home buyer, or a limited cash out refinance (high balance and buyers that are not considered a first time home buyer - 95% max LTV)
-85% LTV 2 Unit
-75% LTV 3-4 Unit
- Minimum 620 Credit score
-2-4 units require 6 months reserves
Second Homes
-1 Unit - 90% LTV
- 620 FICO Minimum
- Minimum 2 months reserves
Investment Properties:
-1 Unit - 85% LTV Purchase Only (75% LTV Limited Cash Out)
- 620 FICO Minimum
- Minimum 6 months reserves
- Minimum $50k loan amount
-2-4 Unit Investment Properties - NOT ALLOWED WITH THIS PRODUCT!
Allowable Repairs or Renovations
- Funds can be used for any repairs or renovations that are permanently affixed and add value to the property.
- Allowable repairs or renovations include, but are not limited to:
- Installation of an “in-ground” swimming pool
- Outdoor living areas are also eligible along with the pool installation
- Subject property cannot be an unfinished model home or unfinished new construction.
- Kitchen appliances (i.e. cooktop/ovens/stove/refrigerator/dishwasher) may be included only as built-in fixtures (attached to property - cannot be removed) in connection with a total kitchen renovation that includes new cabinetry and countertops. Eligibility will be determined by the Renovation Department on a case-by-case basis. Washers and dryers are not included - no exceptions.
- Installation of an “in-ground” swimming pool
-Properties requiring foundation or structural repairs require a foundation or structural report from a licensed engineer. Some examples include but are not limited to additional square footage being added, garage additions with new foundations, cracks or settlement.
Renovation Cost Limits
- The cost of renovations is limited to 75% of the “as-completed value” of the property*.
- No exceptions. This is a Fannie Mae requirement. These limits include the 10% contingency reserve IF FINANCED and all fees/costs listed below in the Fees section. Note: If the cost of renovations exceeds the maximum, the Borrower is NOT allowed to pay the difference at closing from their own funds. However, Contingency funds CAN be paid out of pocket. Any borrower funded contingency that is not used to complete the project will be refunded back to the borrower.
- Projects that include Structural Repairs or Adding Square Footage MUST have a Structural Engineers Report.
- Contingency Reserve
- A contingency reserve equal to 10% (or may be higher depending on scope of work) of the total costs of the repairs and renovation work must be established and funded for all mortgages to cover required unforeseen repairs or deficiencies that are discovered during the renovation.
- 20% contingency reserve required when property needs structural repairs, or where utilities are turned off.
Fees for Renovation loan
- Single Fee: $900
Contractor Validation
- 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
- Borrower's employer
- Members of Borrower's family
- Seller
- Realtor involved in transaction
- Loan Officer involved in transaction
Draw Information and Process
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Copies of permits must be provided to PrimeLending before any subsequent draws will be disbursed, after initial settlement. Work not requiring a permit may begin after loan funding. |
FHA 203K FINANCING
For more info on FHA Financing;
FHA Standard Loan Amounts
- Maximum loan amount as determined by FHA (Conforming Loan Limits depending on location and number of units - below)
- Each county has its own individual area ceiling limit, and can be found here;
FHA 203k Product Overview
LTV Requirements: Maximum of 110%
1-2 units allowed (3-4 units by exception only)
***The Standard 203(k) requires a minimum repair cost of $5k and requires the use of a 203(k) specialist.
***The Limited 203(k) may only be used for minor remodeling and non-structural repairs. The Limited 203(k) does not require the use of a 203(k) Consultant, but a Consultant may be used. There is no minimum rehabilitation cost. Now allowing Manufactured Housing with the limited 203(k)
Maximum number of contractors: 3
Upfront MIP 1.75%, Annual MIP ranges depending on LTV, Base Loan Amount, and Term. See bullets below.
Repair Limits
- Renovation Total can be up to $35,000 in cosmetic repairs.
- This amount includes: 10% contingency reserve and all fees and costs listed in the fee section.
- Exceptions are not allowed to exceed the repair amount.
- Borrower is not allowed to fund overage.
Allowable Repairs
- Repairs and final inspection completed lesser of 180 days or as approved by the Renovation department
- Maximum repairs $35,000 (inclusive of all financed renovation fees). NO Exceptions.
- Roof: repair or replacement (covering, underlayment)
- Gutters/downspouts: install/repair/replace
- Insulation: ceilings/walls/asbestos removal
- Siding/windows/doors
- Paint: interior/exterior/lead paint abatement
- Kitchen: all appliances/cabinets/ total
- Electrical: repair/replace/recondition all
- Plumbing: repair/replace/recondition all
- Repair/Replace HVAC or other systems
- Repairing or removing an in-ground swimming pool
- Installing or repairing fences, walkways and driveways
- Flooring/subflooring/tile/carpet/wood
- Termite treatment/damage repair
- Repairing or replacement of well and septic- *See appraisal section of the guidelines for specific requirements
- Weatherization items/repairs/ improvements
Non-Allowable Repairs
- Structural or requiring engineers report or requiring blueprints
- Repairs performed by the borrower
- No Detached Garages
- No Swimming Pool Installations. Pool Repairs are allowed.
- Improvements that do not conform to the surrounding neighborhood
- Repair cost that exceeds $35,000. NO Exceptions.
- Any new construction including room additions.
- Landscaping or similar site amenity improvements.
- Any repair or improvement requiring a work schedule longer than six months.
- Rehabilitation activities that require more than two payments per specialized contractor.
- Major rehabilitation or major remodeling.
- Required repairs arising from the appraisal that Necessitate a “consultant” to develop a Specification of Repairs/Work Write-Up.”
- Require plans or architectural exhibits.
- Results in work not starting within 30 days after loan closing.
- Borrower is unable to occupy at closing or within 30 days.
- Television antenna and satellite dishes.
- Additions or alterations for commercial use.
- SFR conversion to a 2 unit
Contingency Reserve
- 10% of the cost of rehabilitation
- Properties where the utilities are turned off will require a 20% contingency.
Permits
- If permits are required to complete the improvements, you must have permits prior to any subsequent draws after settlement. No Exceptions
Borrower Acknowledgment
- Parties listed below are not eligible to perform the work:
- Borrower
- Family Member
- Borrowers Employer
- Seller
- Realtor
- Any Interested party to the transaction
Fees
- Single Fee: $550
Fee's associated with FHA Financing;
Upfront mortgage insurance premium (UFMIP), and
Annual insurance premium which is collected in monthly installments
Upfront Mortgage Insurance Premium - For 15 year and greater than 15 years.
- 1.75% of purchase price
Annual Insurance Premium
- Greater than 15 years & greater than or = 95% LTV - 0.85%
- Greater than 15 years & less than 95% LTV - 0.80%
- Less than or = 15 years & Greater than 90% LTV - 0.7%
- Less than or = 15 years & less than 90% LTV - 0.45%
Annual Insurance Premium For Higher Balance Loan Amounts - Greater than $625k
- Greater than 15 years & greater than 95% LTV - 0.105%
- Greater than 15 years & less than or = to 95% LTV - 0.1%
- Less than or = to 15 years & greater than 90% LTV - 0.95%
- Less than or = 15 years & less than or = to 90% LTV - 0.7%
- Less than or = 15 years & less than or = to 78% LTV - 0.45%
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Lender NY (#NMLS 1084877) and Prime Lending Licensed in All 50 States (#NMLS 13649 )
- 585-204-6923
- http://www.jerryrpadilla.com
- [email protected]