FNMA HomeStyle financing allow borrowers to borrow money for the expense of rehab by rolling it into the loan. It may be used for a new home or to refinance an existing mortgage. It may encompass small or large work and therefore is a great option for houses requiring repair. This overview of NH HomeStyle rehab financing includes key facts.
Properties Qualifying For FNMA HomeStyle Financing
FNMA HomeStyle financing may apply to a wide range of property types, however there are some restrictions. Single family properties are typically okay. Condominiums must be reviewed by FNMA and repair is limited to inside the unit. Multi-family properties qualify but the total number of units can not change from the rehab. Properties that do not qualify are mixed use homes, new construction, cooperatives, and multi-family buildings that are not occupied as a primary residence.
There are two different ways of calculating value. First is the forecasted value when completed determined by a professional appraisal. The second is the contact price of the property added to the renovation cost. The lower of these is used to identify the loan-to-value (LTV) figure. This affects the amount of the mortgage.
The acceptable LTV varies based on the type of home. For homes that will be used as a primary residence, 95% is allowed for single families, 85% for multi-families with 2 units, and 75% for 3-4 unit buildings. Second homes are maxed at 90% and single family investment properties 85%. Getting cash back is not authorized.
Rehab estimates must be submitted for financing approval. All estimates must contain precise notations of the repairs, labor and material costs. Money for the rehab expenses are held in an escrow account at settlement and released as work is finished. Specific paperwork must be completed by each contractor. Borrowers may not obtain pay for work that is self-completed. All rehabs must be done 6 months from closing.
Overview Of NH HomeStyle Rehab Financing
This overview of NH HomeStyle rehab financing discusses only a few of the most common questions regarding FNMA HomeStyle financing. Additional terms and restrictions apply. All information is additionally subject to change without notice. Speak with a mortgage advisor for specific facts and to assess whether it aligns with your requirements.