Scott Storace - Branch Manager, 100 Pacifica Drive Ste. 140, Irvine CA 92618 NMLS #226339 949.973.0141

"From the minute you call me to the minute we close, I have your back. No hassles, no banker’s hours & quick response times." - Scott Storace

  • Home Loans up to $3,000,000
  • Interest Rate Float Down Option

Have Questions? Call 949.973.0141

Fannie Mae Homepath Renovation Loan

Orange County, CA – From shabby to chic! If you’ve got a home in need of some TLC, there’s a loan to help. The Fannie Mae Homepath Renovation Loan is a conventional renovation loan option available only on Fannie Mae owned properties. Since it’s a conventional loan program, it’s available on primary homes, second homes and investment properties.

Naturally, the first step is to find a Fannie Mae Homepath Renovation home that suits your needs and lifestyle. To search for eligible properties in your area you can do a map search here.

But it’s also important to understand the pro’s and con’s of the Fannie Mae Homepath Renovation loan. Let’s run down the basics first:

  1. Only 5% down payment is required on a single unit primary property purchase.
  2. 10% down is required for second home purchases.
  3. 25% down is required for investment properties or 2-4 unit property purchases.
  4. The maximum construction cost that can be financed is $35,000. This includes, labor & materials, soft costs (permits, engineering, etc.) and a 10% contingency reserve.
  5. The work must be completed in 120 days.
  6. All upgrades must be permanently affixed to the property.
  7. Maximum loan amount is the conforming level for the county. In Orange County, CA that is $417,000. High balance loans up to $625,500 are granted by exception only.
  8. There are additional fees for administration, inspections and doc preparation.
  9. Mortgage insurance is not required on loans greater than 80% LTV.
  10. An appraisal based on the “as-completed” value is required.
  11. Available on single-family homes, condominiums, PUD’s.

So now you know Fannie Mae Homepath Renovation loan program basics. You’re an expert right? This program can be a phenomenal tool. The $35,000 construction maximum doesn’t allow for major overhauls. If you’re seeking more than $35,000 then you will want to consider the FHA 203k full renovation loan or the Fannie Mae Homestyle renovation.

One of the main benefits, unlike the other renovation programs, is that you need not pay mortgage insurance when putting less than 20% down. That can equate to a significant monthly payment savings. It might also be the difference maker with your debt to income ratios. The offset to that would be the pricing adjustments. With the Fannie Mae Homepath Renovation loans there are significant pricing adjustments the greater your LTV is.

A pricing adjustment is a fee based upon risk. Lower credit scores, higher LTV’s, property type and occupancy type are all factors that influence the pricing adjustments. These pricing adjustments are reflected as points that will be charged at closing.

This program is one of the few that allows investors to purchase run down homes and rehab them. The properties can then be flipped or rented. This is another great benefit! Very few programs allow investors to purchase homes and include their rehab costs in the loan.

So, now it’s time to put on your interior design hat and get to work. Find the home that needs some minor updating, get the loan and put it together.

If you have questions about this program or any other renovation loan, I’m happy to help. And be sure to take the before and after pictures!

Scott Storace

If you like this post please share it!

Comments are closed.