Conventional Loan and Hard Money Together?

Question

I'm not sure if this is even possible, but has anyone ever tried to use a conventional loan and hard money together for a deal? If I'm considering a property to do a flip, can I do a conventional loan with 20% down, and then use hard money to finance the rehab costs?

Blaine Bacon · Answer

If you are wanting to flip it, the fha or 203k wouldn't be a good choice because you have to keep those for at least a year.

Account Closed · Answer

Only if one of the parties is willing to take second position.

Charlie Fitzgerald · Answer

You will have a hard time finding a private money lender to come in behind an existing 1st mortgage where you only have 20% equity in the property.  Additionally, make sure you are telling your mortgage provider that the house you are buying is an investment property that you intend to fix/flip.

Good luck.

Stacy Weng · Answer

Sorry, maybe I had my loan terms mixed up. By conventional loan, I meant an regular investment loan through a normal bank, with at least 20% down, instead of through private lending. Can that be used in conjunction with other private / hard lending?

Charlie Fitzgerald · Answer

Conventional loans have a requirement that you intend to occupy the property being purchased for a minimum of 3 years in order for it to be an owner occupied primary residence transaction..  If you are intending to flip the property, and you apply for a conventional loan and indicate that you are buying it as a primary residence, you are making a fraudulent application to a mortgage lender.  That's not something you want to do.

Blaine Bacon · Answer

That's correct.

Stacy Weng · Answer

Good to know... regular conventional loans don't have that restriction right?

Jay J. · Answer

I would think that there would be a conflict (between lenders) as to who has 'first position' on the property, but I'm not a lender so I'm not really sure..  I guess it would depend on the lenders (banks vs family or friends) too. Depending on the deal you're looking at, maybe a FHA/203(k) loan would work better?

either way, I'm sure a 'lending expert' will chime in and give you a better answer..

Conventional Loan and Hard Money Together?

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