homepath houses for the 10% loan how does it work?

Question

My question is what qualifies a house for the homepath financing? Some of the houses that need more rehab don't qualify because they involve too much work I understand that.

Some other questions are how does the rehab loan work? For example do you have to use there list of contractors? I will do my own research on ARV of houses but is this something that they take into consideration when giving you a loan. I am new to the whole process and am in the process of getting pre-qualified. I also love the fact that my first property that I am buying can be used as rental income for 75% despite not having significant landlord experience. I now have 10% down for 2-3 more rentals in the 40-50k range so I plan to keep looking around now. thanks

Anthony Nelson · Answer

The no appraisal part surprises me. I believe you are right Mogi when i spoke to the rep I discussed the renovation financing. There interest rates where also pretty good about 5% in my area, but you pay 3 points.

Mogi P. · Answer

I just got off the phone with three lenders, and they all tell me 10% for NOO (don't have any mortgages). This is for Homepath mortgage only, NOT Homepath renovation and mortgage. I was told only about 7 of those in TX do the renovation loans. This may explain why some folks are getting 15% as oppose to 10%.

Other info:
680+ credit score
No PMI
No appraisal

Hope this helps

Account Closed · Answer

yes, it does seem like something to consider. thanks for that information, and yes I heard of using leases too as showing your rents which is what my current mortgage lender did as well.

Anthony Nelson · Answer

I actually just spoke with a rep from Salem Five and she said that they require 15% down (Purchase+Rehab Costs) and you must provide contractor quotes for all the work that will be done up to $35k. She also told me that usually they only count rental income if it has shown up on tax returns, but you may be able to get around it by showing leases. They also want to see 45% DTI ratios. They also require a minimum of 3 points, depending on your credit score.

Overall the program sounded pretty good. They allow you to choose your own contractors to do the work as long as they are licensed and insured. You receive a portion of the rehab funds at closing and depending on the amount you can draw 2 or 3 more times.

Account Closed · Answer

yes, it seems like a great program I just want to know more about how they determine which contractors to use, how they are paid etc.

Corey Demuth · Answer

curious about this program as well

Account Closed · Answer

I have called Salem five and I believe the rehab is 15% with them. As far as the 75% rental
Income is good for me since I don't make much on my w2 as I am a part time server. Instead of using my rental as a liability they will claim the income which helps me when determining if I can afford another mortgage

Anthony Nelson · Answer

Sport im not far from you. (springfield, MA) do you have a specific bank you are using for this? I looked up the banks in MA on there website and when I call they are telling me they are still requiring 20% down.

Mogi, i believe sport meant he can count 75% of his rent as income.

Mogi P. · Answer

Can you please clarify the 75% part? 75% of what?

I also would love more insight on homepath. I do know that most fannie mae REOs qualify for homepath. Some don't, and it might be because they require too much rehab like you said.