Can I take out a bigger mortgage loan than house is worth for repairs?
We are buying our first home and were approved for a conventional loan of 130k. We are looking at a fixer upper house in an extremely nice neighborhood where most houses sell for 170k but this house is only 110k because it needs a lot of work. We would literally need to be put in all flooring, all appliances, and paint it. However, it is our first house, and we barely have enough money for closing and all fees involved. We would like to earn some value in this home and would rather buy a fixer than buy a 130k house already completed but in a less than nice neighborhood. Are you allowed to take out a mortgage bigger than the houses value to make such repairs? by sheila_477_156 from Abita Springs, Louisiana. May 15th 2012
Patrick McCarthy (PatrickM)
#22 ranked lender in Ohio - 196 contributions
Yes, Sheila. You can access the Fannie Mae 'Homestyle' renovation loan. This should do what you need. Hope this helps.Pat McCarthy
William J Acres (William_Acres)
#74 ranked lender in Arizona - 8,728 contributions
There are FHA and Conventional programs out there available so the answer is yes.. If you're going FHA, you want a 203K rehabilitation loan. With FHA, you only need 3.5% down. Conventional HomeStyle renovation loan will have you complying to conventional guidelines.. higher credit score, lower allowable debt to income rations, and larger down payment...The best advice I can give you is to contact a LOCAL mortgage broker, not the local "Big" bank, and certainly not one of those 50 states internet lenders...By applying with your LOCAL Broker, you have an advantage because he's familiar with local customs and works with numerous lenders, seeking out the best loan terms for your particular scenario. Because he has lower overhead, he can offer you lower rates and lower fees than most of the larger lenders.. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. 480-287-5714 WilliamAcres.com
Linda Wintersteen (Linda123)
#63 ranked lender in Arizona - 1,256 contributions
thru FHA , THEY have a rehab program,, you hire a contractor, and then the repairs are done, it takes a while, months to complete
Todd Tholl (toddtholl@leader1.com)
#4 ranked lender in Iowa - 239 contributions
There are programs out there such as the FHA 203K loan mentioned here. Find a local mortgage banker that offers the program to get the specifics.
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