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Home Path Loans

Hello to the Zillow Community,

I am trying to find out more about the homepath loans for investors and does anyone have experience with this loan? Required credit score? Debt to income. I am looking to invest in residential properties and would like to put down 5-10%.


Thank you kindly,
  • January 06 2011 - Westchase
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Answers (9)

Yes, the property must be a Home Path property as designated by Fannie Mae. 

You can get Fannie Mae to pay part of your closing costs, but on an investment property the amount they can pay is limited to 2% of the purchase price ($1,300-$1,500), so it won't help much.

The closing costs vary with the interest rate, credit score, etc.  If you want a lower rate you will pay higher closing costs, higher rate gets you lower closing costs, so it is hard to say what the closing costs will be unless you know about a dozen other things. 

Assuming you don't want to buy the rate down you can probably figure on at least $4,500.00 for closing costs and prepaids.  Home Path loans don't require an appraisal, so that helps a little, but I already left that out.  Get Fannie to pay 2% and you're looking at $3,000 for closing costs/prepaids for a $75,000 home plus the $7,500 down payment, and you would be a little short with $10,000.
  • January 07 2011
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Correct.

No you cannot roll Closing costs into the loan amount.  Your closing costs will vary state to state.  The closing costs will not vary greatly from any other loan in yoru state.  with the exception of points for being an investment property and points for No MI.  Without factoring in FICO scores you are looking at 5.5% in points 3.75% for Investment LTV>85% and 1.75% for No MI.
  • January 07 2011
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In order to qualify for a Homepath loan a property has to be designated as such by Fannie Mae, correct?
  • January 07 2011
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Profile picture for tiahouston
Ok so you are not sure how much is needed for closing cost with the 10% downpayment? Have you encounter any closing were Homepath rolls the closing into the loan. So there is little out of pocket?


Thank you kindly for you input.
  • January 07 2011
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Generally, if you are buying an investment property you are going to need to have some reserves, but again the amount is going to be dependent on what the automated underwriting system wants.  I've seen it require no reserves, and I've seen it require 6 months of reserves for all properties.

You will also have to pay closing costs and prepaids in addition to the downpayment.  It is very tough to do a no closing cost loan on that small of a loan.

You may also have trouble fiunding a lender to do that small of a loan.  Some of my lenders won't do that small of a loan for an investment property, and not all offer Home Path.  I think I only have 1 lender that will do a $60K Home Path loan.
  • January 06 2011
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Profile picture for tiahouston
Thank you both for writing me back so fast. From your experience if i want to buy a home for $65-75k i only need to bring $6500-7,500.00 to the closing? With that price range do i need reserves or any other funds?Example:Home is $70k and i have $10k is that enough?
Kind regards,
  • January 06 2011
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It seems to like assets as well.  Reserves flipped a refer to approve for me.
  • January 06 2011
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I have done some in TX.  AA's answer is right.  Need to run them through the automated underwriting system which will evaluate all the aspects of the loan in combination to determine approval.  Hard to say exactly what combination of DTI and credit score it will or will not approve until you try it.
  • January 06 2011
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Min Fico 660 Investors are allowed howver the down payment will vary depending on units Single Family 90%. 2-4 80% unnless the investor owns 5-10 properties then they will need 25% down.

DTI is even harder to nail down.  You need automated approval so it will vary depending on yoru credit profile.  I have had folks that I have not be able to get approved at all and others that would get approved with 45% DTI...Have yet to figure out what is approvable and what isn't without running it through the engine.
  • January 06 2011
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