In today’s San Diego real estate market many homes listed for sale are in need of serious repairs or remodeling. Many buyers pass the opportunity to buy a home at a bargain price because they do not have the funds available to do the repairs. This scenario makes perfect sense for a Renovation Loan in the San Diego market. A Renovation Loan allows the buyer to take advantage of the bargain purchase by combining the cost of the home with the renovation/remodeling costs all in one loan. The work is done after escrow closes from the funds that have been set aside. There are 4 types of Renovation Loans available in San Diego that serve different needs:
Fannie Mae HomeStyle Renovation Loan In San Diego
The Fannie Mae HomeStyle Renovation Loan allows up to a 95% Loan to Value (LTV) with Mortgage Insurance and a maximum loan amount of $417,000 with a 700 FICO score. The Fannie Mae HomeStyle Renovation Loan can be used on an Owner Occupied, Second Home, or Investment Property. The LTV on second homes and investment properties will be lower. The renovation amount cannot exceed 50% of finished appraised value and the buyer has up to 6 months to complete the renovation.
Fannie Mae Homepath Renovation Loan In San Diego
The Fannie Mae Homepath Renovation Loan is a special loan offered on Fannie Mae foreclosed properties. Eligible properties can be located at http://www.homepath.com and must state that they are eligible for the Renovation Loan. The Fannie Mae Homepath Renovation Loan allows up to a 97% LTV with no Mortgage Insurance and Loan amounts up to $417,000 with a 660 FICO score. A buyer in San Diego can use this program on an Owner Occupied or Investment Property. The investment property LTV would be capped at 75%. The renovation amount cannot exceed 35% of finished appraised value or $35,000 and the buyer has up to 3 months to complete renovation.
FHA 203K Renovation Loan In San Diego
The FHA 203K Renovation Loan is an FHA loan that allows up to 96.5% LTV and loan amounts up to the FHA county limit, which is $697,500 for San Diego County. This program follows most of FHAs other guidelines allowing for lower credit scores (minimum 620) and higher debt to income ratios (50%). The FHA 203K Renovation Loan allows repairs up to 50% of the loan amount. This program does require a Cost Consultant which can add to the closing costs. This program is usually used for major repairs and mortgage payments may be financed into the loan if the house is uninhabitable.
FHA 203K Streamline Renovation Loan In San Diego
The FHA 203K Streamline Renovation Loan is called a streamline because it only allows $35,000 of repairs to be financed into the loan and it limits the draws at closing to 2. It also does not require a cost consultant which decreases the closing costs. The FHA 203K Streamline Renovation Loan still allows up to a 96.5% LTV and loan amounts up to $697,500. The client can also add an Energy Efficient Mortgage of up to $8,000 for the installation and purchase of energy efficient appliances, windows, and insulation.
All 4 of these programs have allowable and non-allowable improvements. For example, these programs cannot be used to add a pool or other “luxury items”. If you are a Real Estate agent in the San Diego area we will be hosting a seminar on renovation loans on June 29th, 2011 at our office. Please call if you would like more information or if you have any further questions on renovation loans.