Renovation Financing: Homepath Renovation

I am thrilled to say that as of today Salem Five has been approved to originate Homepath Renovation loans and thought it would be a good topic to write about.

Q: What is a Homepath Renovation loan?

A: Fannie Mae has a number of properties that they currently own and are marketing for sale.  You can find these properties at www.homepath.com. that site will list all the properties that Fannie Mae is currently marketing.  In order to be eligible for Homepath Renovation financing the listing must be designated as Homepath Renovation eligible.

Q: What is special about Homepath Renovation financing?

A: These are just a few of the benefits

  1. The program allows you to incorporate the cost of repairs into your 1st mortgage.
  2. It allows loan to values as high as 97% and will allow the remaining 3% to be a gift ot grant from a non profit or Govt agency.
  3. No MI is required…now that sounds better than it really is because although there is no MI the rate you will pay will cost more based on the loan to value.
Homepath "NO MI" LLPA’s
LTV Add On
80.01-85% 1.00%
85.01-90% 1.75%
90.01-95% 2.50%
95.01-97% 3.63%

Q: How do I qualify?

A: The best thing to do is to contact an approved Homepath Renovation lender in your local area.  A list of lenders can be found on Fannie Mae’s Website. Some of the more important qualifications are as follows:

  1. Unlike the non-renovation homepath loans investors are not allowed.  This program is for 1-4 unit properties that will be owner occupied.
  2. Minimum Fico score is 660
  3. The Max Rehab is $30,000 realistically that number is $27,000 because the rehab funds must include a 10% contingency for unexpected repairs.

This program is probably not right for everyone but it is certainly worth exploring.  It may be in your best interest to work with a lender/loan officer that offers both the Homepath Renovation loan as well as the FHA 203K Renovation loan.  Just in case you start to look at the scope of work and realize that all the repairs you would like to make ends up exceeding the $30,000 limit on the Homepath Renovation project.  A Common mistake folks that choose renovation loans make is they cut too many corners to keep a budget and end up saying after the fact I wish had done this or I wish I had done that…Make sure to explore all your options.

The maximum loan to values allowed on homepath loans follow the Selling guide with the following exceptions:

  1. 90/90/90 for 1-unit investment properties
  2. 80/80/80 for 2-unit investment properties
  3.  75/75/75 for 2-4 unit investment properties where the borrower owns 5-10 financed properties as described in the “Eligibility Matrix” on the www.efanniemae.com website.