All Forum Posts by: Eric Helder

Hey everyone,

Brand new to real estate investing here (and in the process of buying my own personal home), but I've already discussed some future financing options with lenders. One option that came up is delayed financing, which sounds great, but one part confuses me. My lenders both stated they would do delayed financing based on 75% of cash purchase price of single-family investment home. So, you get the benefit of a quick mortgage but only get 25% of your investment back.

However, in reading about delayed financing here and other places, I've seen others say that delayed financing is either the lower of the purchase price OR 75% of the appraised value. So buying a property at its appraised value, you'd only get back 75% of your purchase price. But if you bought a property at 75% of market value, you could in theory get back 100% of the purchase price.  A few questions:

1. Am I reading that correctly? Fannie Mae guidelines state: "The new loan amount can be no more than the actual documented amount of the borrower's initial investment in purchasing the property plus the financing of closing costs, prepaid fees, and points on the new mortgage loan (subject to the maximum LTV, CLTV, and HCLTV ratios for the cash-out transaction based on the current appraised value)." That would lead me to me to believe that it can in fact be based of appraised value, however both of my lenders seemed pretty clear that their delayed financing is 75% of my purchase price, and they didn't mention appraised value.

2. I've also seen people claim they wrap rehab costs into the HUD-1. That would allow delayed financing to be based on purchase price (including rehab) OR 75% of ARV (which is higher due to rehab), meaning the potential exists to pull out 100% of purchase price PLUS rehab. Correct?

3. What's the process for adding rehab costs to HUD-1 (if that is in fact possible)? If I buy property through county foreclosure auction, does that leave any opportunity to add rehab costs to HUD-1?

Really appreciated any and all insight as I look into these creative way to get into property investing! Thanks!

@Bill Rich, thanks so much for the thorough response! Bummer to hear that HomeStyle is 15% down since it sounds like otherwise it's an option that would let me do painting myself. I'm not opposed to doing a 203k and having a contractor paint, I'd just have to make sure it would fit into my overall budget/total mortgage price for the house. I suppose another option would be to talk to the seller (an acquaintance of a friend) and see if they'd let me do painting with a firm commitment/contract to buy the house, but that's probably risky. 

One more question if you don't mind. I was preliminarily quoted a 2.5% interest rate for a 30 year term on a regular FHA loan. I assume a 203k has a higher rate due to more risk for the lender, do you know about how much higher on average the rate is versus a regular FHA loan? Thanks so much!

Hi everyone,

I'm a 27-year-old young professional looking at buying my first house (owner-occupied duplex) in the Midwest. I have quite a bit of student debt, but a good credit score (750+) and high annual income. After researching mortgage options, a low down payment mortgage (5% or less) is really appealing (even with mortgage insurance) as it opens up a higher price point, and I've run the numbers extensively and know that it will work for me (plus save me money over my current rent). I have a potential off-market deal on a duplex that looks to be a great deal (and is currently very livable), but needs some TLC (peeling paint on wood siding, etc.), most of which I can do myself. I was pretty much set on an FHA 203k or Fannie Mae HomeStyle loan to bundle some of the major renovation costs (add central A/C, etc.) into the mortgage, but looks like I may run into a few hiccups.

• 1. It appears that FHA loans do not allow for peeling paint. Could I still get a 203k approved if painting was bundled in the mortgage?
• 2. However, I'd much rather paint myself and am very capable of doing it. Any way I could get a 203k for other renovations but do the painting myself?
• 3. It appears the HomeStyle mortgage is less strict, but one reference shows that owner-occupied duplexes require 15% down - can anyone confirm?
• 4. Any other options for a low-down payment loan that bundles in renovation costs, but could be approved on a house with peeling paint (maybe something that is contingent on me painting house within 90 days or something)?

Thanks so much for any advice!