Rehab or renovation mortgages can be used to purchase or refinance and fix up a home all in one shot with just one loan. The Fannie Mae HomeStyle Loan is the conventional buy and fix up loan and the 203k Full or 203K Streamline is the FHA version.
The Fannie Mae option allows for all kinds of luxury type home improvements like financing a pool or outdoor kitchen. Even with little equity you may still be able to add on or complete improvements that will add value to your home.
You can also use these programs to refinance and fix up your home with little equity, but they are mostly marketed and well known as a home purchase solution. Allowing buyers to select a home in need of repairs that might not qualify for a regular purchase loan due to condition. You might be able to make a great buy since fewer buyers are looking at these homes.
Which one will I qualify for?
The FHA product is offered by more lenders and offers lower down payment and low credit score options with some lenders. This program is easy to qualify for and widely available.
The Fannie Mae program will require good to excellent credit and a larger down payment. If you have 20% down and are looking to avoid paying mortgage insurance (MIP or PMI) then this is the way to go. If you are looking to add a pool or other luxury home improvements this may also be the way to go since these may not be allowed with the government program (FHA).
The key to success with either option is to work with a broker and lender who have experience and are closing these in your area.
You can learn more about the Fannie Mae option here, the government option here or by calling C & C Financial Services, Inc at 813-874-5800.
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