This will determine the available rate and leverage that a borrower can get. • Does the borrower have cash reserves, or do I need to use a program that gives credit for the cash-out funds towards the reserve requirement?

Hi Sharon,There are several options for borrowers with poor credit to still get financing, the lenders will just be looking closer at some other factors such as the borrower's experience and their liquidity.

Whatever you utilize this HELOC for, it is imperitive that you transition these funds into opportunities that provide a much higher return than what you are borrowing at. 

With my current salary I can only borrow 300k and it will give me limited directory in the market I’m looking at. 

All in One is great and probably the best for a highly qualified borrower.

If the loan gets called, you can not force the sale of the property to cover the wrap unless the borrower has violated the terms of the agreement.

@Zach MckinnisMaybe a DSCR - but many lenders would turn this borrower away because of the low credit score - which shows their inability to pay their debts. - along with inconsistent incomeTo be honest this person should not be investing in real estate and focus their time and energy on getting a stable w2 or income and get their credit cleaned up first

Specifying colors, tile, cabinets or anything else in a rehab is directing the borrower.

The other option is to form an LLC prior and both go on the loan in terms of dual borrowers so that the land is used from one owner and the assets or cost to build is coming out of the other partners funds.If you do not own a primary home you can build a home with as little as 3.5% down but cannot use an investor for that option. 

Here are the Fannie Mae guidelines for legally non-conforming properties:If the Property's characteristics are legally non-conforming, you must:ensure the Borrower executes the Modifications to Multifamily Loan and Security Agreement (Legal Non-Conforming Status) (Form 6275);confirm whether, if fully or partially destroyed, the Property's Improvements can be fully rebuilt to the pre-casualty condition per current laws, zoning requirements, and building codes; and if the Property’s Improvements cannot be fully rebuilt to the pre-casualty condition, evaluate if the as-rebuilt Property will support the Mortgage Loan at the current Tier, and document your analysis in the Transaction Approval Memo.To assess the Borrower's ability to rebuild Improvements on a non-conforming Property to a level that will support the Mortgage Loan at the current Tier, you should consider: conducting a threshold analysis to determine the resulting actual amortizing DSCR if the reconstructed Improvements cannot be rebuilt as-is per current law; the likelihood of a casualty event (e.g., wind, earthquake, fire, flood, mine subsidence, etc.); the percentage of damage to the Improvements at which the Property’s jurisdiction will require the Property be rebuilt to current zoning and land use requirements (i.e., the destruction threshold); which Property characteristics the destruction threshold percentage applies to, such as market value, assessed value, replacement cost, or unit count; for Properties with multiple buildings, if the destruction threshold percentage applies to each building, or all buildings as a whole; the replacement cost to rebuild per current requirements for zoning, and land use; the Property’s continued marketability, and economic viability; the amount and type of Borrower-maintained insurance coverage required per Part II, Chapter 5: Property and Liability Insurance, Section 501.02C: Ordinance or Law Insurance; insurance loss proceeds payout, compared to increased rebuilding costs, including from building code changes, Americans with Disabilities Act compliance, and the municipality's local zoning requirements (e.g., green compliance for new buildings, etc.); the sufficiency of estimated insurance proceeds from ordinance or law insurance and other coverages to repay the Mortgage Loan in the event of partial or full casualty, or condemnation; and for a Tier 3 or Tier 4 Mortgage Loan, if requiring execution of the Limited Payment Guaranty (Form 6020.LPG) would mitigate the risk of the as-rebuilt Property not supporting a Tier 2 Mortgage Loan.