All Forum Posts by: Nicholas Edwards

@Matt Devincenzo

Yes that is true but getting a loan in this specific scenario through underwriting presents challenges. Convincing underwriting that someone is going to move out of their current multi-unit into another and use it as a primary residence is a challenge. Many times they're going to look at this and say it's being used as an "investment property" even though you might have every intention of moving into it. Additionally, as @Stephanie Medellin mentioned you will need a 25% down payment on multi-unit property. At that point you should just refinance out of the 203(k) and utilize the FHA program again.

@Paul Welden

With the specific scenario presented by @Clayton Hepler getting a HomeStyle loan through underwriting as a “Primary Residence” is going to be tough. Most underwriters are going to look at this scenario and say he has no intention of moving out of his current multi-unit. While they do allow up to 4 units for a “primary residence” it’s going to be difficult convincing underwriters/investors otherwise.

@Paul Welden

Unfortunately investment property eligibility under the HomeStyle product is limited to single family homes! Good thought though because this product is great if your going to be a first time home buyer with low money down and someone is buying a multi-unit to house hack! Definitely a great alternative to FHA 203(k) loans for first time homebuyers who are house hacking!

@Clayton Hepler

Unfortunately, you cannot use Fannie Mae’s HomeStyle product on a multi unit investment property. The only investment property that qualifies under the program is a single family home! Hope this helps some!

@Demon S Rogers

The funding fee for VA is 2.3% of the loan value if you're utilizing the program for the first time. If it's second use on VA I believe it goes to 3.6%. There is no funding fee on a conventional loan. However, if you're not putting 20% down on a conventional loan you will have to pay PMI for a period of 10 years or when you have at least 20% equity. The PMI rate depends on a variety of factors (how much equity in the property, etc). The simple fact that VA has a funding fee and conventional products don't does not make it a more expensive loan. You have to factor in down payment and PMI associated with conventional products. Overall, if you have eligibility for a VA loan it's a great product to use and I would always advise to utilize the product over a conventional product. Hope this helps clear any questions you might have had about either programs!

@Jeff Modjeska

Getting a true cost on a major rehab or even a new build right now is going to be extremely challenging. The futures market for lumber has been going down for 8 days but yet feedback from the lumber yard in our area is showing no sign of pricing coming down anytime soon. In the past 4-6 months especially prices have changed overnight with no warning or heads up (PVC products, subfloor, etc). On top of pricing issues getting the material and managing a schedule is the next hurdle. Tons of volatility in the building materials market overall.

With the building materials market being the way it is right now I think your better off attempting a major rehab on a buy and hold property rather than a flip. Especially if it’s a multi-unit property and you can rent some of the units while you’re fixing up the rest. Good luck!