Did new Fannie guidelines just ruin BRRR?

Question

The max the loan can be is 75% of the new appraised value. However, the first six months the max the new loan amount can be is no more than the purchase price, closing costs, of the current property at the time of the initial purchase. Prior to the verbiage use to include the word improvements. In a recent guideline change/update from Fannie they removed the word improvements as part of the initial investment and changed the verbiage.

Basically now you can only get back what you bought the property for, improvements that increase the value will not count unless you wait 6 months from purchase.

Dakota A. · Answer

I was under the impression that improvements are not available to be cashed-out unless the costs of those improvements were included in the closing statement (i.e. included as part of the purchase price).

Keith Jourdan · Answer

I was able to do it right after rehab, before 6 month seasoning period and before tenant lease was signed. Underwriting would take into account contractor invoices of completed work.

Kris L. · Answer

@Keith Jourdan

Is that a new rule?  I always thought F&F loans had a 6 month seasoning and anything shorter was a non F&F loan.