I know what you are thinking… “didn’t he recently write about the HomePath program?” Yes, I did recently put up a post about the Fannie Mae HomePath Mortgage program, but I didn’t mention anything about the Fannie Mae HomePath Renovation Mortgage. Think of the “renovation mortgage” as the sibling to the “mortgage.” Let me explain.
The HomePath Renovation Mortgage shares many of the same features of the HomePath Mortgage program:
- available for primary residence, second homes and investment properties
- need a minimum of 660+ credit score
- only a 3% down payment required for primary residence (15% for investment properties)
- no private mortgage insurance on the loan
The best part of this program is all of the $$$ a buyer can use to put some tender loving care into a home. There is no minimum repair cost associated with the Renovation Mortgage, and buyers can finance the lesser of 20% of the “after completion value” of the home OR up to $30,000.
To simplify things, for homes with an “after completion value” of $150,000 or more, the maximum renovation amount will always be $30,000. Any amount under $150,000 will be 20% of the value. One thing to keep in mind is the maximum renovation amount must include a 10% contingency reserve.
Let’s say you have $30,000 for renovations, what can you do:
- unlike the FHA 203k streamline mortgage, structural repairs/additions can be made to a home. This means the buyer can knock out walls, add a room onto the home, etc.
- luxury items such as swimming pools, hot-tubs, fences, etc. are allowed
- renovations can include appliances
- all renovations can be 100% cosmetic (no structural changes to the home), so new paint, carpet, tile, etc. is certainly a fine way to go too!
The Fannie Mae HomePath Renovation mortgage is a great way to purchase a home and make some repairs to it with no out of pocket costs to the buyer outside of the down payment on the loan.
Do remember that Fannie Mae designed this loan program to facilitate the sale of homes they own. In other words, they are foreclosed homes. There are numerous properties available, and they can be viewed here.
Those interested in making an offer on a home to use this rehab loan will need a prequalification letter, and that is something I can provide! If you are looking to get prequalified, learn more about interest rates for this program, total monthly payments, etc., feel free to call or email me. I would enjoy helping you through the mortgage process!
