Fannie Mae HomeStyle home loans allow home buyers to borrow money for the expense of rehabilitation by rolling it into the mortgage. It may be used for the acquisition of a new home or the refinance of a current property. It can encompass minor or extensive repairs and thus is a useful option for houses needing repair. This MA HomeStyle rehab home loans overview provides useful information.
Types Of Properties Eligible For Fannie Mae HomeStyle Home Loans
Fannie Mae HomeStyle home loans may apply to a wide range of properties, although there are certain restrictions. Single family homes generally qualify. Condominiums must be approved by Fannie Mae and rehab restricted to the interior. Multi-family properties are allowed but the total number of units can not increase or decrease as the result of the rehab. Property types that do not be permitted are mixed use real estate, new construction, cooperatives, and multi-families that do not intend to be utilized as a primary home.
There are two different methods for calculating value. The first is the forecasted value when repairs are done determined by a formal appraisal. The second is the purchase price of the property plus the total rehab cost. The lower of these two is used to determine the loan-to-value (LTV) percentage. This determines the down payment and how much is being loaned.
The acceptable LTV varies by the property type. For real estate that is used as a primary residence, 95% is the maximum for single family real estate, 85% for buildings with 2 units, and 75% for 3-4 unit buildings. Second homes are limited to 90% and single family investments 85%. Cash out is not permitted for these mortgages.
Rehab costs must be reviewed for loan approval. All estimates must contain precise details on the work, labor and material charges. Funds for the contractor fees are placed into an escrow account at settlement and released as work is completed. Specific paperwork must be submitted by every contractor. Home buyers may not receive money for repairs that are self-completed. All rehabs must be finished 6 months from closing.
MA HomeStyle Rehab Home Loans Overview
This MA HomeStyle rehab home loans overview covers only a few of the most common questions about Fannie Mae HomeStyle home loans. Additional terms and qualifications apply to program review and approval. All information is additionally likely to change without notice. Consult with a loan advisor for further information and to determine if it matches your needs.