Multiple Investment Property Rehab Loans? What are the different types?
When purchasing or refinancing a home in need of repairs or upgrades, choosing the right rehab loan is essential. There are Multiple Investment Property Rehab Loans out there to cater to different financial needs, repair scopes, and property conditions. Understanding these options can help buyers or homeowners make informed decisions about financing their projects. Below are five common types of rehab loans that offer flexibility and opportunity.
FHA 203(K)
One popular option is the FHA 203(k) Loan, which is backed by the Federal Housing Administration. This loan is specifically designed for purchasing or refinancing homes that require minor or major renovations. The 203(k) loan comes in two forms: the Standard 203(k) for extensive structural repairs and the Limited 203(k) for smaller-scale projects. Borrowers benefit from low down payments and lenient credit requirements, but the work must be completed by FHA-approved contractors within six months of closing.
Fannie Mae Homestyle
Another choice is the Fannie Mae HomeStyle Loan, a conventional loan that allows borrowers to finance the purchase or refinance of a property along with the cost of renovations. Unlike the FHA 203(k), HomeStyle loans are not limited to primary residences and can be used for vacation homes or investment properties. They also allow for a broader range of improvements, including luxury upgrades, as long as the renovations add value to the property. This option requires a higher credit score and a larger down payment than FHA loans but offers greater flexibility.
VA Renovation Loan
For veterans or active-duty service members, the VA Renovation Loan is a suitable choice. Backed by the Department of Veterans Affairs, this loan enables eligible borrowers to purchase or refinance a home and roll the cost of repairs into the mortgage. While it shares some similarities with FHA loans, the VA Renovation Loan typically has no down payment requirement and offers competitive interest rates. However, the renovations must meet VA property standards and be approved by a VA-certified contractor.
Freddie Mac CHOICE Renovation
Two additional options include the Freddie Mac CHOICERenovation Loan and the Hard Money Rehab Loan. The CHOICERenovation Loan is similar to the HomeStyle Loan but offers added features, such as financing for disaster-resilience improvements. Hard Money Rehab Loans, on the other hand, are short-term loans provided by private lenders, often used by real estate investors for “fix-and-flip” projects. These loans typically have higher interest rates and fees but provide fast funding and more lenient approval processes, making them ideal for time-sensitive investments.
Selecting the right rehab loan depends on factors like the type of property, the scope of renovations, and your financial situation. FHA 203(k) and VA loans cater to borrowers with lower credit scores or limited savings, while conventional loans like HomeStyle and CHOICERenovation provide more options for experienced homeowners and investors. Hard money loans, while more expensive, are valuable for those needing quick access to funds. By evaluating the unique features of these loans, buyers and homeowners can find the perfect fit for their renovation goals.
Call Adam Lawrence to discuss your personal loan scenario today.
What are the benefits of Multiple Investment Property Rehab Loans from Valor Lending Group?
One of the major advantages of a renovation loan is the lower down payment. Depending on your investor experience you can purchase the property as low as 10% down. Lower down payment allows you to leverage your money and invest in more projects. This increases your buying power and mitigates loss of all your capital.
Major advantage of a renovation loan is 100% of the rehab cost is included into the loan amount. No out of pocket cost for the renovation! Most lenders accrue interest as drawn. If not all funds are used, the remaining funds can be reimbursed at the exit or end of the loan.
What’s the difference between Multiple Investment Property Rehab Loans and a construction loan?
Construction loans fund a new build from the ground up, up, changing the framing, square footage, or zoning.
Renovation loans are to upgrade the current structure including flooring, drywall/paint, appliances, etc. No major work or construction takes place.
Rehab Loan Highlights
- 85% of purchase price with 100% of rehab
- Light Rehab – fix and flip only
- Experienced investor 3+ | 681+ FICO
- Starting at 9.99%
- Max 85% LTC; Max 90% LTV; Max 75% ARV
Required documents for approval
- Application
- Valid Photo ID
- Credit Pulled By Valor Lending Group
- REO Schedule or Investor History. First time investors welcome!
- 2 Months Business or Personal Bank Account Statements
- Purchase Contact
- Scope of Work
- Licensed, insured, and bonded General Contractor
CALL ADAM LAWRENCE TODAY FOR ALL AND EVERY LOAN SCENERIO 858-344-0323 or ALAWRENCE@VALORLENDING.COM
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