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Renovation Loan

I've been trying to secure financing to complete the renovations on a home we recently purchased so we can move into it.  The home was not in great shape but was livable, however, we are doing quite a bit of renovations to make it a very nice home.  I've applied for 2 HELOC's and 1 construction that were denied.  Not because of my personal credit, etc (which is impeccable) but because of the current condition of the home.  At this point, we have begun construction on our own dime but need to secure additional funding (quickly I might add) to complete the home. We paid cash for the home, have almost zero debt, a lot of assets, and great incomes.  We are trying to be smart consumers instead of liquidating many of our assets to make this work but continue to run into road blocks because of the house.  Any help is appreciated.  
  • April 14 2013 - Indianapolis
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Answers (11)

I am not a lender but a few options might be:

Check with a credit union or small local bank (They are usually a little less strict).

See if you qualify for a "re-hab mortgage".  There are both fha and conventional rehab mortgages.  In most case, you would actually have to hire professionals to do the work and the bank would pay them as they complete it.   Probably a little more expensive way to do it, but at least your house would be complete and liveable. 

Good Luck.
  • April 14 2013
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I think you seriously need to consider how much you want to sink into this home (which you should have considered before you bought the place).  You bought the place "as is" which makes me think it was a foreclosure.  I advise my buyers to get a home inspection before purchasing a home, which helps to give them guidelines as to how much they would need to spend on a home to make it a nice home.  You don't qualify for a mortgage now for it, because you have already purchased it. If the structural damage is extremely severe, the lenders are not going to finance it.  It may be in your best interest to just re-sell as is, and cut your losses. 
  • April 14 2013
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Consider doing an FHA 203k Renovation Loan, which is available for existing home owners. 

Although 'self-help' on a 203k is permitted according to HUD/FHA guidelines, most lenders won't allow it or charge extra points to do so. So, you will most likely be required to use a General Contractor for the renovations and it's best to use a GC with 203k experience such as a Certified 203k Contractor. 
  • April 15 2013
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We can do a Conventional loan based on the future value of your home with our Renovation Refinance program.  The FHA 203K loan is available also, but has higher PMI costs.

Give me a call and we can discuss your options in detail.

  • April 16 2013
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Based on your scenario described, I would not go with a 203K. This is a costly FHA loan and you have less expensive options.
Shawn mentioned a "Conventional, Renovation Refinance". This is the route I would take.
I am curious as to why they denied a construction loan. Regardless of the condition of the house & being credit sufficient, you can get a construction loan on an empty lot. Was it a true construction loan?
If you find you need a construction loan, I would be happy to point you in the right direction. Based on your financial situation, i dont see why you would be denied.
  • April 16 2013
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I'm not sure why you would be denied either.  I have several lenders who I think would be able to help you with this.  Feel free to contact me directly and I can send you their contact information.  Hopefully you have found a solution by now, but if not let me know.  Good luck.
  • April 16 2013
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There is FHA 203k loan and Home Path renovation loan. I would suggest that you consult with a lender/broker who is experienced in these. A good consultant can evaluate the property, provide you with details on the requirements and guidelines.
  • October 20 2013
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Profile picture for Ben Pitta
Contact Heath Hall. He is a preferred lender on my Zillow site!!! Good luck
Broker Benjamin1.
  • October 20 2013
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The best program out there for what you are needing is the HomeStlyes Renovation Loan.  This loan allows for up to $150,000 in renovations or 50% of the improved value of the home whichever is less.  The appraisal will be based on an as completed value and condition.  The renovations must be attached to the home and provide value.   
  • February 23 2014
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  • March 20 2014
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Just answered a similar post about this so i will state the same.

Look into the FHA 203K programs or the conventional Homestyle rehab programs as well. Make sure you choose a lender that specializes in these programs and is authorized to do the Homestyle programs as they are lender specific.

You want to make sure your lender has done these before and has a support team in place so the loan gets expedited smoothly for you.

Good luck and best wishes!
-Scott
  • March 20 2014
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