I need a Mortgage Lender
Member since 2026 · 20 posts · 17 votes
I need a Mortgage Lender
Most Popular Reply
J CastroBusiness Member
Lender · Florida · Member since 2025 · 698 posts · 253 votesHi @Ferdia Kenny, welcome to BP!
From a lender’s perspective, the main thing to clarify first is whether this Philadelphia townhouse will be a primary residence or an investment property (non-owner occupied) and whether it needs renovation funds included in the financing.
If this is an investment property with rehab work needed, a traditional mortgage or HomePath loan is generally not the right fit. HomePath is limited to specific Fannie Mae-owned properties and does not typically solve for purchase + renovation on an open-market deal.
The more appropriate structure in your case would be a Fix & Flip loan
A Fix & Flip (also called bridge or renovation financing) is designed specifically for this type of scenario:
- Covers both purchase price + renovation costs
- Short-term financing (typically 6–18 months)
- Based more on the after-repair value (ARV) than your income
- Flexible underwriting (credit and income less restrictive than traditional mortgages)
- Funds are often released in draws as the rehab progresses
With a 20% down payment, you’re generally in a strong position to qualify, depending on the deal, property condition, and exit strategy.
Exit Strategy Options (very important to lenders)
Once the renovation is completed and the property is stabilized, you typically have two options:
1. Sell the Property
- Refinance is not needed
- You pay off the bridge loan at closing
- You realize the profit from the flip
2. Refinance into a DSCR Loan (most common investor route)
- Long-term rental financing based on property cash flow (not personal income)
- Typically 30-year amortization
- Qualification based on DSCR (Debt Service Coverage Ratio) instead of W-2 income
- Allows you to hold the property as a cash-flowing rental
For a non-owner occupied townhouse in need of renovation, the typical path is:
Fix & Flip loan - renovate - stabilize - either sell or refinance into a DSCR loan
That structure is what most active investors use today because it solves both the acquisition + rehab challenge upfront, and then transitions into long-term financing once the property is stabilized.
If you’re trying to force this into a traditional mortgage product, it’s likely why your broker is running into limitations—this type of deal usually sits in the investment / bridge lending space, not conventional home financing.
21 Replies
- Specialist · NJ · Member since 2022 · 1k+ posts · 653 votes5mo
Philly is a black ball city right now for lots of lenders.
What is your credit? What is your capital?
- Member since 2026 · 20 posts · 17 votes5mo
@Mike Klarman My credit is 800. The sale price of the house is 85k and I'm planning to put 70k for renovations, so I plan to do 20% down on the $155K. The Fanny Mae HomeStyle seems like the best option for me
- Lender · Miami · Member since 2026 · 7 posts · 4 votes5mo
Quote from @Ferdia Kenny:
Any advice for getting a mortgage lender for a 20% deposit on a purchase + renovation for a Philadelphia townhouse. I asked my Broker and he said he does not know any lenders that can do this. I understand that the Fannie Mae HomePath mortgage works for this, right? How do I get one of those?Philly has honestly become a little tough for a lot of lenders lately, especially with townhouses that need work. Doesn’t mean the deal can’t get done, just need the right lender and structure. I would look for lenders or broker that focus on renovation loans instead of a standard conventional lender.
- Lender · Springfield, MO · Member since 2024 · 3 posts · 3 votes5mo
While most lenders have tightened up on lending in Philly as well as several other cities across the country, some are still lending there. Depending on the details of your specific project, there may be options. I have frequently helped my clients secure financing for their renovation deals.
- Investor · Seattle, WA · Member since 2026 · 14 posts · 8 votes5mo
The original "HomePath" program has changed, you can achieve the same goal using the Fannie Mae HomeStyle or Freddie Mac CHOICERenovation programs. These allow you to buy the property and fund the repairs with one single mortgage based on the home's "future value" once it's fixed up. Since you have a 20% deposit, these are ideal because they offer much lower permanent interest rates, and you won't have to pay for a second set of closing costs to refinance later. If you plan to live in one of the units, the FHA 203(k) is another flexible option designed specifically for "fixer-uppers" that is often more lenient with older Philadelphia properties.
The reason your current broker might be hitting a wall is that many national lenders "blackball" certain Philadelphia zip codes due to local complexities. To get around this, look for a local portfolio lender or a credit union in the PA/NJ area. These smaller banks keep the loans on their own books rather than selling them to big investors, which gives them the flexibility to approve renovation projects that larger banks might find too risky.
- 5moErik EstradaBusiness MemberLender · Member since 2022 · 6k+ posts · 1k+ votes
Quote from @Ferdia Kenny:
Any advice for getting a mortgage lender for a 20% deposit on a purchase + renovation for a Philadelphia townhouse. I asked my Broker and he said he does not know any lenders that can do this. I understand that the Fannie Mae HomePath mortgage works for this, right? How do I get one of those?Is this for an owner occupied home or non-owner occupied?
LuxePrivate Investments LLC 572 Reviews- Member since 2026 · 20 posts · 17 votes5mo
@Erik Estrada non-owner occupied. It's going to be a rental. The plan is to go with the Fanny Mae HomeStyle mortgage. 85K sale price + 70K renovations, with 20% down on the 155K
- 5moErik EstradaBusiness MemberLender · Member since 2022 · 6k+ posts · 1k+ votes
Quote from @Ferdia Kenny:
@Erik Estrada non-owner occupied. It's going to be a rental. The plan is to go with the Fanny Mae HomeStyle mortgage. 85K sale price + 70K renovations, with 20% down on the 155K
Maybe you might want to consider a fix and flip style loan, as others suggested. Why is the rehab cost so high? Is this a full gut renovation?
LuxePrivate Investments LLC 572 Reviews
- 5moStacy RaskinBusiness MemberLender · Member since 2022 · 1k+ posts · 508 votes
If a non owner occupied property, there are fix and flip loans with up to 90% financing on the purchase and 100% of the rehab done on draws. The options depend on the borrower's credit, the property location and the ARV. Happy to connect to discuss further.
Bright Skyline518 Reviews - 4moJ CastroBusiness MemberLender · Florida · Member since 2025 · 698 posts · 253 votes
Hi @Ferdia Kenny, welcome to BP!
From a lender’s perspective, the main thing to clarify first is whether this Philadelphia townhouse will be a primary residence or an investment property (non-owner occupied) and whether it needs renovation funds included in the financing.If this is an investment property with rehab work needed, a traditional mortgage or HomePath loan is generally not the right fit. HomePath is limited to specific Fannie Mae-owned properties and does not typically solve for purchase + renovation on an open-market deal.
The more appropriate structure in your case would be a Fix & Flip loan
A Fix & Flip (also called bridge or renovation financing) is designed specifically for this type of scenario:
- Covers both purchase price + renovation costs
- Short-term financing (typically 6–18 months)
- Based more on the after-repair value (ARV) than your income
- Flexible underwriting (credit and income less restrictive than traditional mortgages)
- Funds are often released in draws as the rehab progresses
With a 20% down payment, you’re generally in a strong position to qualify, depending on the deal, property condition, and exit strategy.
Exit Strategy Options (very important to lenders)
Once the renovation is completed and the property is stabilized, you typically have two options:
1. Sell the Property
- Refinance is not needed
- You pay off the bridge loan at closing
- You realize the profit from the flip
2. Refinance into a DSCR Loan (most common investor route)
- Long-term rental financing based on property cash flow (not personal income)
- Typically 30-year amortization
- Qualification based on DSCR (Debt Service Coverage Ratio) instead of W-2 income
- Allows you to hold the property as a cash-flowing rental
For a non-owner occupied townhouse in need of renovation, the typical path is:
Fix & Flip loan - renovate - stabilize - either sell or refinance into a DSCR loanThat structure is what most active investors use today because it solves both the acquisition + rehab challenge upfront, and then transitions into long-term financing once the property is stabilized.
If you’re trying to force this into a traditional mortgage product, it’s likely why your broker is running into limitations—this type of deal usually sits in the investment / bridge lending space, not conventional home financing.
- 4moAlan AsriantsBusiness MemberReal Estate Agent · Philadelphia, PA · Member since 2019 · 1k+ posts · 1k+ votes
If you are doing this as an investment it almost always has to be fix and flip loan. That being said, there are options for 10% down + renovation costs and are pretty easy in terms of qualifying. Of course the project has to make sense. There are however issues with getting NON QM financing right now in Philly as it has been black balled by a lot of lenders due to fraud cases. Ill send a contact in your PM now
Alan Asriants - New Century Real Estate 591 Reviews - Banker · MA · Member since 2026 · 120 posts · 33 votes4mo
Great breakdown above — the fix-and-flip to DSCR refi pathway is exactly the right framework for a non-owner-occupied property that needs rehab work before it can be held long-term.
A few additional data points worth thinking through before Ferdia locks in a structure:
**On the Fix & Flip side:**
- Lenders will want to see a realistic ARV supported by solid comps — Philadelphia has some micro-market variation, so the comp selection matters more than people expect.
- Draw schedules vary by lender; understanding the inspection/draw timeline upfront prevents cash flow hiccups mid-renovation.
- With 20% down, the loan-to-cost (LTC) and loan-to-ARV ratios are the real qualifying metrics — not income. Know both before you submit.
**On the DSCR refi exit:**
- Most DSCR lenders want the property seasoned and stabilized (tenant in place or at minimum a signed lease) before they'll underwrite the refi.
- DSCR ratio requirements typically start at 1.0–1.25x depending on the lender and loan structure — run the rent-to-PITIA math before you close on the bridge loan, not after.
- The after-repair value used on the bridge loan should be conservative enough that the DSCR refi proceeds cover the payoff cleanly.
Having done this for 31 years, the deals that go sideways almost always trace back to optimistic ARV assumptions or an exit strategy that wasn't stress-tested at the start. Modeling both ends of the transaction before you fund the acquisition is the discipline that separates a good flip from a painful one.
Hope this adds some useful color — feel free to DM me if you want to talk through the numbers on a specific deal.
Jim Driscoll
- Member since 2026 · 9 posts · 0 votes4mo
Just a point of clarification—are you planning to owner-occupy the townhouse or use it as an investment property?
If it's an investment property, there may be financing options beyond HomePath that can cover both acquisition and renovation costs, depending on the property's condition and your experience level. The answer will really depend on the intended use and scope of rehab.
- Lender · Princeton, NJ · Member since 2026 · 24 posts · 7 votes3mo
The first question I'd ask is whether this is an owner-occupied purchase or an investment property.
If it's an investment property, many investors look at acquisition-plus-renovation financing rather than trying to piece together separate purchase and rehab funding.
What kind of renovation are you planning cosmetic updates or a more substantial rehab?
- Lender · Member since 2025 · 36 posts · 7 votes3mo
Unless this is going to be a purchase for your primary home, you won't be looking at the Fannie Mae HomePath option. If it is, you'd be best looking into a mortgage for the home itself and then a HELOC or personal loan for the renovations.
If this is an investment, you'll want to look at business purpose lenders (Hard Money/Private Money) that will lend on the purchase and renovation then into the DSCR loan if you're looking to hold it. That will be the best track for this side of things.
Let me know if you have any questions on this or feel free to reach out.
- Lender · Washington DC · Member since 2026 · 73 posts · 19 votes2mo
Yes, you can absolutely do this! Having 20% down puts you in a fantastic position.
What you are looking for is the Fannie Mae HomeStyle Renovation loan, which lets you combine the purchase price and construction costs into one mortgage based on the property's as-completed value. With 20% down, a conventional rehab loan keeps your monthly payments low and avoids lifetime mortgage insurance.
If this is an investment property or if you want a faster closing without bank bureaucracy, alternative private rehab loans or digital equity access are also very popular choices in Philadelphia.
Are you planning to live in the townhouse as a primary residence, or is this a rental/investment project?
- 2moJoseph ScoreseBusiness MemberBanker · Philadelphia · Member since 2009 · 2k+ posts · 634 votes
Hi Ferdia,
It really depends on what you're trying to accomplish with the property.
If it's going to be owner-occupied, there are renovation loan programs such as Fannie Mae HomeStyle, FHA 203(k), and other renovation financing options that combine the purchase and renovation costs into one loan. Not every mortgage broker offers these products, so it may be worth speaking with a lender that specializes in renovation lending.
If the property is an investment property, your options are different. Many private lenders offer purchase-and-rehab financing based on the property's current value and, in many cases, its after-repair value (ARV). These loans can be an excellent solution for investors planning to renovate and either hold or resell the property.
Since you're in Philadelphia, I'd also recommend paying close attention to renovation costs, permit requirements, and neighborhood values to ensure the numbers support your investment strategy before moving forward.
If you can share whether this is owner-occupied or an investment property, along with the purchase price and estimated renovation budget, I'd be happy to point you in the right direction and discuss the financing options that would make the most sense.
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