HMLs: Do most only fund up to 70% ARV?

[Ashley Benning]

As I do more research into HMLs in California, I am seeing that although they will fund up to 90% of the purchase price, and 100% of the rehab costs, their max loan is 70% ARV. In Los Angeles, where getting an ARV that is 30% higher than purchase price and rehab is a bit of a challenge. So, I believe an HML would work this way (hypothetically):

$900,000 ARV (70% of which is $630,000)

$565,000 Purchase Price, of which HML will cover $480,250 (85%)

$150,000 rehab, of which HML will cover $145,750 (100%)

In this case, the rehab cost plus 85% of purchase price = 70%ARV so this scenario would work, yes? I would be responsible for closing costs, probably some points up front, and then the interest obviously.

But if the ARV above were only $850,000 (70% of which is $595,000) I would either need to find a way to cut the renovation budget by $35,000 OR I would have to finance the part the HML wouldn't cover some other way. Or get the purchase price down to $445,000--yikes.

Do I seem to understand how this works? Thanks in advance for helping me understand this better.

Ashley