One World Realty in Jacksonville Florida
Charles Gaulden
904-859-1778904-859-1778

FHA 203k and Fannie Mae Renovation loans

  • When is the appraisal ordered on a FHA 203k and Fannie Mae Renovation loans? We do not order the appraisal until the detailed Scope of Work is completed and signed by the buyer and the contractor. The appraisal is performed Subject-To the After-Improved value. On FHA 203k you get up to 110% of the After-Improved value which means a 10% buffer. All repairs are done AFTER CLOSING.
  • What happens if the utilities CANNOT be turned on with a property because of leaks, extended vacancy, etc? With the renovation loan we would include the cost of any necessary repairs AND we will always keep at least 15% contingency money in the case there are additional repairs needed. Example – Cost of work = $10,000. Contingency would be at least $1,500. For homes that have been vacant for least 12 months – JEA will require an electrical inspection and city inspection prior to activating the power or water.
  • How is the down payment calculated on a FHA 203k loan? The minimum 3.5% down payment is calculated off the sales price of the house plus the cost of rehabilitation or repairs. Example: $100,000 sales price + $15,000 repairs = $115,000 x 3.5% = $4,025. A buyer can certainly choose to have a larger down payment but these are the minimums.
  • Are Renovation loans – FHA 203k and Fannie Mae Homestlyes – good for Refinances too? Yes. You can Refinance & Renovate which means not only lowering your interest rate, but also including the cost of improvements as well. 3 great advantages:
  • Appraisal is based on After-Improved Value
  • FHA 203k – you get up to 110% of the after-Improved Value.
  • Closing costs can be financed into the loan
  • On FHA 203k and Fannie Mae Renovation loans can the buyers act as their own contractor? While the guidelines on some versions of the loans allow for “Self Help”, both HUD and Fannie Mae discourage the practice because of the level of risk. The guidelines call for the buyers to be licensed/insured contractors AND there are NO upfront monies provided for materials. So, the buyers must prove the ability to perform the job in workmanlike manner AND have sufficient funds for both the loan and repairs. There are other guidelines that restrict the amount of work that can be done in a “Self Help” transaction.

FHA 203k Loan Renovations Project

  • On a HUD REO property, what does it mean when HUD allows an Escrow Holdback?
    HUD foreclosures generally are not financable As-Is. The HUD appraisal/property condition report will note the major items to be addressed and a very rough estimate of the costs. When HUD allows for an escrow holdback it simply means they will allow the buyer to escrow his/her OWN funds to address the necessary repairs in order to meet FHA minimum property standards. However, the majority of the time there are additional items to address after inspections AND the buyers are better off using either a FHA 203k or Fannie Mae renovation loan to address the property conditions. HUD properties are best addressed on a case-by-case basis to ensure the best solutions are being used.
  • On FHA 203k loans are there different qualifying standards than a typical FHA Loan? No! credit qualifying is the same for any FHA loan with REMN. The only big qualifying difference is the Loan Amount as the buyer must qualify for a higher loan amount with a FHA 203k loan because of the additional repair/improvement monies.
  • What is the maximum amount of work that can be done with a HomePath Renovation loan? There is a $35,000 maximum for cost of renovation on a HomePath Renovation loan. However, both FHA 203k and Fannie Mae Standard renovation loans do NOT have a hard Maximum Repair Amount.
  • If a buyer wants to use a VA loan but the home has WDO damage etc. is there any way to avoid a renovation loan? Yes! REMN offers the HomeFixer Program on ALL loans – including VA. If there are minor repairs items that no do NOT affect the health and safety of the property, the buyer can escrow up to $5,000 of their own funds to address the repairs within 14 days of closing. CLICK HERE for HomeFixer Details.
  • If a buyer wants to use a conventional loan and put 20% down, what happens if the home needs a new roof (ex) in order to obtain financing? We simply treat the transaction as Fannie Mae renovation loan but the buyer can choose to put additional money down. Ex – House is $200,000 but needs a new roof. Buyer gets an estimate for $10,000 for new roof. $210,000 x 20%  = $42,000. The buyer can always pay more down and not finance the repairs, but the Renovation Loan/Appraisal allows the transaction to close despite of the property condition.

FHA 203k or Fannie Mae conventional renovation loan

  • How much renovation can you do on a FHA 203k or Fannie Mae conventional renovation loan?  As far as the Scope of Work, you can literally take a home down to the foundation and build it back up from scratch. The only cap on the dollar amount of work has to do with appraised values, buyer qualifying and FHA county loan limits/Conventional loan limits.
  • Appraised Vale  – on FHA 203k you get up to 110% of the after-improved value. Conventional appraisals are standard with no buffer.
  • FHA loan limits – In Northeast FL the limit is $387,500 for SFR (after down payment).
  • Conventional loan limits – $417,000 (after down payment). Higher limits for 2-4 unit properties.
  • On Conventional Renovation loan what are some luxury items that are allowed? Swimming Pools, Summer Kitchens, Landscaping, work on Docks & Bulkheads, etc. Call for specific details or scenarios.
  • What are the benefits of HomePath mortgages? The biggest benefit has to do with condos since Fannie Mae HomePath condos do NOT require approval
    and there is NO appraisal.  For investors on HomePath the minimum down payment is just 10%, and for those buyers who want to perform all the repairs/improvements themselves, since there is no appraisal then can close and then start the work. NOTE – HomePath Renovation loans require appraisals and have different down payment requirements.
  • When writing a CONTRACT for an FHA 203k or Fannie Mae Conventional Renovation loan what additional information needs to be included? Generally, you will write the contract As-Is (not always for resales) for the sales price of the house. Just check “FHA” or “Conventional” like all transactions. Its best practice to note in “Other Terms & Conditions” that the “Buyer to use FHA 203k / Fannie Mae Homestyles Renovation loan to address property conditions”. There are times with a resale that you might write a clause involving value but not on REO or short sale properties.

FHA 203k loan or Fannie Mae renovation loans

On FHA 203k loan or Fannie Mae renovation loans, what happens if there are more repairs than expected after completing the inspections? There are several options depending on the seller of the property:
  • If it’s an REO/short sale thus an As-Is property, you can simply back out of the contract based on the inspection contingency.
  • You can also continue with the REO transaction and request the seller reduce the sales price based on the property conditions. However, you must assume the bank will NOT make an changes since the property is being sold As-is. If the repairs affect the health & safety of the property you might see some relief.
  • At times,  you can ask the REO bank to make certain repairs that affect the livability of the home. This can be time consuming since they will require several estimates. In addition, Fannie Mae often has a contractual clause that allows them to raise the sales price to address the repairs. This is NOT needed if you simply use a renovation loan.
  • If the buyer is past the inspection period per contract and still needs to back out of the contract based on property conditions, we can use the Financing Contingency to cancel the transaction and get the Binder Deposit returned.
  • If its a traditional resale then the seller could either make the repairs, reduce the sale price or cancel the transaction based on the proeprty conditions.
  • Why would someone NOT get approved for a HomePath or HomePath Renovation loan? HomePath loans are conventional loans thus much more restrictive when it comes to qualifying. Here are some of the factors that can be restrictive and also require additional monies down:
  • Credit – you must have stronger and deeper credit. at least 660-680 to start (without 20% down).
  • Property type – Condos are much stricter/riskier and thus the automated underwriting  (DU) will often not approve buyers for condos unless they have strong credit and/or larger down payments.
  • Down payment – If the buyer is putting 3-5% down it is going to be much stricter than if they are putting 20% down. It’s a simple layer of risk issue.
  • Debt-to-income ratio – Fannie Mae loans are much stricter than FHA and generally cannot exceed 45% DTI regardless of the buyer’s overall profile.
  • Rates – HomePath loans have numerous additional overlays when it comes to pricing rates which often leads to higher interest rates and a higher costs to even get a rate.
  • Does using a FHA 203k or Fannie Mae renovation loan help with getting lower insurance rates? YES! Not only can it make the difference of even getting insurance on certain properties, it allows the buyer to get better insurance rates based on the after-improved condition of the property. For more details on this please contact me via phone or email.

FHA 203k and Fannie Mae renovation loans

  • How do you know the amount of money to include for repairs in a FHA 203k or Fannie Mae conventional loan? For the sake of getting an initial loan approval we either make an educated guess on repair costs or submit a loan to qualify for the MAXIMUM loan amount. However, when the Scope of Repairs (SOR) if finalized we simply edit the loan to match and update all numbers for the buyer. They key is getting that initial credit approval without waiting on the Scope of Repairs to be finalized.
    • ex: $150,000 sales price + $20,000 repairs = $170,000 loan for approval.
    • Final SOR comes in at $17,000 we adjust the loan to $167,000 prior to final approval and closing.
  • What happens if we Fannie Mae accepts our offer using a Homepath Renovation loan but it turns out FHA 203k was a better loan choice for the buyer? Simple edit. We can amend the contract to indicate buyer is using a FHA 203k loan. As long as Fannie Mae knows you are using the correct type of loan to get the property closed (renovation) they will allow you to edit the contract. Ideally, we will pre-approve the buyers prior to the offer so the initial contract is correct from the start.
  • What are the differences with when Fannie Mae or Freddie Mac is the seller on a REO property? Since they are officially government-backed agencies, both Freddie and Fannie are exempt from paying Deed Stamp Taxes unless specifically addressed on the REO contract addendum. In addition, much like a typical REO property, the seller will not pay the settlement fee ($450-$850) or survey ($350). NOTE – If the contract is written correctly, Fannie Mae will often pay up to 6% of buyers closing costs/prepaids (on owner occupied) and Freddie Mac will pay up to 3% of buyer’s closing costs/prepaids. Each property/asset manager can dictate what the bank will pay on behalf of the buyer.

FHA 203k & Conventional Renovation

  • With FHA 203k or conventional renovation, if a WDO inspection indicates a house has Live Termites does the seller/bank have to treat the house before closing? NO. As long as the treatment is listed on the Scope of Repairs it will be done AFTER CLOSING like everything on a FHA 203k or Conventional renovation loan.
  • If a home is partially rehabbed but still needs wall, plumbing, electrical etc., can that be finished with a FHA 203k or Conventional renovation loan? YES. As long as the home was existing and was originally issued a certificate of occupancy (1 year for FHA) you can complete the work in your loan. However, on Conventional Renovation loans you CAN complete a new home that was never finished or issued a certificate of occupancy (or add a pool).
  • Can someone purchase and renovate a 4-unit property with an FHA 203k loan? YES. You can do up to 4 units as long as you live in one of the units as your primary home. NOTE – The buyer can use projected rental income from the other 3 units to help qualify for the loan.  
  • What is the minimum credit score for a Fannie Mae HomePath or HomePath Renovation loan?
  • HomePath -LTV greater than 80% –  660 and auto approve in desktop underwriting (DU); LTV less than 80% determined by DU but generally 620.
  • HomePath Renovation – LTV greater than 80% –  660 and auto approve in desktop underwriting (DU); LTV less than 80% determined by DU but generally 620.

Homes For Sale – Use The Wells Fargo Downpayment Assistance Neighborhood Lift Program & FHA 203k Renovation Loan for Upgrades

We're sorry, but we couldn't find MLS # 611200 in our database. This property may be a new listing or possibly taken off the market. Please check back again.

This a great Home To use the FHA/HUD 203k Renovation Program and the Wells Fargo Neighborhood Lift Program

Call Me Today  For a Showing (904) 348-0452

www.realtyhomecenter.com/

 

 

Homes For Sale Jacksonville FL – Wells Fargo NeighborhoodLIFTSM program

Wells Fargo brings program to Jacksonville housing market

Homes For Sale in Jacksonville Fl… Home Buyers Gets in on the New Wells Fargo Home Mortgage NeighborhoodLIFT Program. It’s the New Downpayment Assistance Program in the Jacksonville Fl Area That Help  Home Buyers Come Up To $15,000.00 Toward there Downpayment Assistance to Help Home Purchase in Jacksonville, Florida.

Who can qualify?

The program is available if you are

approved for home financing and your

household income is equal to or less

than 120% of the area median income.

Whether this is your first home or you

are ready to buy again, there are a

number of homebuyer education

requirements that must be completed

prior to the home purchase.  Check out these Income Examples Below:

Area Median Income (AMI) AdjustedFor Family Size of 1- 100% (AMI) $47,100.00 – 115% (AMI) $54,150.00 – 120%(AMI) $56,500.00

Area Median Income (AMI) AdjustedFor Family Size of 2 – 100% (AMI) $53,850.00- 115% (AMI) $61,950.00- 120%(AMI) $56,500.00

This Program is Great for the 203k Renovation Programs for REO’s and Short Sale Properties  Purchases To… To Get more Information https://www.wellsfargo.com/mortgage/lift

Homes For Sale Jacksonville FL – Wells Fargo NeighborhoodLIFTSM program  

Some Nearby Neighborhoods that you can Use this Program in Jacksonville, Fl

Argyle Forest
Bellair-Meadowbrook Terrace
Jacksonville Heights South
McGirts Creek
Oak Hill
Settlers Landing

Herlong

Jacksonville Farms-Terrace
Marietta
Normandy Estate
Normandy Manor
Otis
Rolling Hills
Whiteho

 Dunns Creek Crossing, Dunns Creek Pointe, Cedar Bay, Lexington Park, Yellow Bluff Landing, Heron’s Walk, Tidewater, Amelia View