Financing a property with 2nd bathroom unfinished

[Tim B.]

Hi BP, I am under contract to purchase a 3 bed 2 bath in Atlanta, GA. The second bathroom is in the middle of a renovation and a leaky shower, the toilet, and vanity was removed. The master bath is good to go. The seller will not finish and wants to sell as is. I am using conventional financing for the purchase. I have one lender telling me it can be done with 2 options: appraise as-is, or appraise at finished value ONLY if I escrow the funds required to complete the 2nd bath renovation. I have another lender (who will save me about 5k in loan costs) telling me it cant be mortgaged as-is. He is currently confirming with his underwriters. Has anyone been in a similar situation and had success with getting the loan approved? 

[Brenden Mitchum]

Hey @Tim B.!

Sounds like an ideal property for the Fannie Mae Homestyle Program. The program is basically the conventional version of the FHA 203k but with less paperwork and often a quicker close (depending on the lender). This is likely what your first lender is planning to do if you choose to appraise at ARV and wrap the reno into the loan. As long as the seller is not looking for a fast close or has more competitive offers, this can be a great way to get into a distressed property.

If you have further questions about the program, shoot me a message and I can drop you my lender's contact info - He's well versed in rehab loans.