There's a new Loan in town for Investors
Benefits of a HomeStyle Investment Loan:
- With a HomeStyle Mortgage, you can purchase or refinance Investment properties (1-unit) including attached Single Family and attached/detached planned unit developments (PUD’s).
- 15% is the minimum down payment
- Perfect for properties that may have been given very low marks on quality and condition ratings and unable to obtain financing with Regular Conventional loans.
- Purchase properties for a lower overall cost because the sellers are not able to do repairs
- The contractor costs can be built into the loan.
- No need for a second mortgage to repair the property. All costs are built into the first mortgage, which means lower closing costs.
- Any type of repair is eligible (including well, septic, luxury items can be installed such as a pool or spa and where applicable termite, mold, and lead paint removal), as long as it is permanently affixed to the property and adds value.
Details on Using the HomeStyle Loan on your Investment Properties
Purchases or refinances (Fixed Rate and Adjustable Rate) as high as:
- 85% of Acquisition Cost + Rehab Cost (ACRC) up to AV for Fixed Rate on 1-unit investment purchase loan
- 75% of AV for Fixed Rate on 1-unit investment property refinance
- Payment reserves determined on a case by case basis
Contractor and Builder Requirements When Using the HomeStyle Mortgage
- Must have a construction contract with a contractor, no self-builds
- Use of a HUD Approved 203k Consultant is required
- The Bank reviews and approves your contractor to determine they are adequately qualified to perform the work and complete the job
- Plans & Specs must have been prepared by a registered, licensed, or certified general contractor, renovation consultant, or architect
- Plans & Specs must fully describe all work to be done & state when stages of completion will be scheduled, including both the job start & completion date
Guidance when using a HomeStyle Mortgage for Investment properties
- Not eligible for manufactured housing or Condos
Property Flipping Not Allowed you must hold property for a minimum of 1-year
- If a refinance, you are not eligible to receive any cash back at closing
- Renovation costs are limited to 50% of the total loan amount
- Minimum Rehab Cost is $5,0000
Renovation Costs may include:
- Labor and materials
- Soft costs (architect fees, permits, licenses, inspection fees, independent consultant fees, engineering fees, fees charged for processing draws, fees for energy reports (HERS), review of renovation plans)
- Contingency reserve of 10% of the cost of labor, materials and soft costs) – this is optional,
- Contingency reserve may be financed or funded separately by the borrower
- Funds must be placed in an interest-bearing custodial account
- Contractor bid must be given to appraiser to determine ARV
- If using this loan for Energy Related Improvements, a HERS Energy report must be provided to us and appraiser
- When work is completed, the bank and you must sign the HomeStyle® Completion Certification
- If funds remain after all work is performed, they will be applied to the loan
So if you’ve been looking for that perfect investment house or need to fix up an existing house in your portfolio the HomeStyle Mortgage loan may be the perfect way you can buy or fix up your investment cash flow property you would otherwise not be able to purchase or repair.
Contact us anytime and we would be delighted to consult with you and your project.