HomeStyle Mortgage Slashes Investment Real Estate Down Payments

(Last Updated On: August 8, 2017)

HomeStyle Mortgage for InvestorsWhen buying investment real estate properties leverage is key.  The more cash you use the lower your leverage and experience a lower return on investment.  Fannie Mae has introduced the HomeStyle Mortgage to help you with that.  With the HomeStyle Investor loan, you can buy properties with less cash out of pocket and at lower prices.One of the greatest challenges of investing in real estate is leveraging your cash and being able to buy more properties creating even higher leverage and greater returns.  Most investment real estate loans for individual single family properties require between 20 percent and 25 percent down.

In this market, you may have been outbid for prime properties because of other investors overbid for them.   There is an answer: Bid on properties that need some work that the other investors or homeowners don’t want to bid on and banks or sellers want to dump without making the needed repairs to garner a prime price.

There’s a new loan in town it is the HomeStyle Mortgage

FLeverage with Investment Real Estate annie Mae has recently introduced the HomeStyle Investor loan.  With as little as 15 percent down you can own an investment rental property with no mortgage insurance.  Unlike the FHA 203k renovation loan the HomeStyle Loan can be used both on your primary home, second home and on investment rental property.  To be eligible to use the HomeStyle Mortgage for your Investment property you need to have at least $5,000 in costs and repairs.  Most properties real estate investors are buying at a bargain will easily qualify for that amount of work.

It is a conventional loan so you do not have the limitations normal financing and your final loan (depending on area) may be as high at $625,000 for 1 unit investment properties.  Below I will cover the details on using this loan for investment properties.  On a future blog, I will cover how you can also use the HomeStyle renovation loan for your primary home and second home.

This information is current as of  Monday August 21st 2017

Here are some of the features of the HomeStyle Investment Real Estate Loans.  For a complete list and to discuss your particular project and availability in your area and maximum loan amounts contact us today.

Benefits and Features of the HomeStyle Investment Real Estate Mortgage:

  • 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.
  • 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.
HomeStyle Allowed Improvements for Investment properties
... and many more, If it is permanently affixed and adds value it may be allowed. Contact us about your project.
Room AdditionsAdding an Attached Garage
repairing or adding roofing, gutters and downspouts;Foundation Repair
Addition of Luxury Itme such as Pools or Spasrepairing/replacing plumbing, heating, AC and electrical systems
making site improvements that add valueLead Paint & Asbestos removal
Installing or Repairing of Wells and/or SepticConnecting to public water and sewage systems
Termite removal and repairMold Removal

Financing Details For Using a HomeStyle Loan for 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 Requirements For Using a HomeStyle Mortgage

  • Must have a construction contract with a contractor, no self-buildsRequirements for Rehab Contractor
  • 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 dates

Changes to repair plans when Using a HomeStyle Mortgage

  • Any changes to original Plans and Specs must be accompanied by a HomeStyle Change Order Request

Insurance Requirements when Using a HomeStyle Loan

  • You will be required to obtain Hazard, Flood (where applicable) at the ACRC or Loan Amount (for refinances) at time of loan closing

Limitations 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

Availability of the homestyle renovation loans when purchasing investment property nationwide

Home improvement, renovation, and rehab Mortgage Loan State Availability

Home improvement, renovation, and rehab Mortgage Loan State Availability
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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.

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