Renovation “Conventional Rehab Loan”

Consolidated Financing for Purchase

Clients who are interested in buying or renovating property in Oklahoma City, Edmond, or the surrounding areas can use conventional rehab loans as a source of financing. Local mortgage professionals, the Land Run Mortgage team, offer flexible financing terms for conventional rehab loan loans. We are a private lender that has extensive experience in conventional rehab loans and can offer clients fast approval. Conventional rehab loans simplify closing costs and reduce payments for homes that require structural or cosmetic rehabilitation. For more information on this financing option, or to make real estate investments, contact Land Run Mortgage.

What is a Conventional Rehab loan?

Rehab loans are also known as renovation home improvement loan and are available to clients who want to purchase a home that is in dire need of repairs. Conventional rehab loans can be used as a single-close loan. These loans provide financing for the purchase or repair of a home, as required by an appraiser. Conventional rehab loans can be used for financing primary and second homes, as well as investment properties.

Private lenders such as Land Run Mortgage are able to fund conventional rehab loans. These loans are used to fund structural and cosmetic home renovations that are done by licensed remodelers, plumbers, and other trade professionals. They do not cover the cost of appliances, unless they are part of a complete kitchen remodel or in special circumstances.

Fannie Mae offers the HomeStyle Renovation loan which is one of the most popular conventional rehab loans. HomeStyle loans offer affordable down payments and reduced mortgage insurance options. These loans can be used to purchase a home and renovate it for up to $417,000. The HomePath Renovation option is another popular type of conventional rehab loan. It can be used for home purchase and renovation costs up to $417,000. HomePath Renovations can only be used for homes that have been foreclosed through Fannie Mae mortgages. Land Run Mortgage’s mortgage professionals will provide more information about each type of conventional rehab loan to help you make the right decision for your goals and needs.

Are I Eligible for a Conventional Rehab loan?

Conventional rehab loans are not government-backed and are private-funded. This means that they have stricter approval requirements than government loans. You will need to prove that you can afford your monthly payments and other costs associated with the property in order to be eligible for conventional rehab loan. Your credit score and credit history will be evaluated by the Land Run Mortgage team as part of your loan application. We are independent lenders and can provide financing for clients who might not be eligible for financing from big banks.

FHA 203(k), if you cannot meet the requirements for a conventional rehabilitation loan, may be able to help you. The renovation loan program combines closing costs, paperwork and documentation for home purchase and rehab into one transaction. Federal Housing Administration backs this type of loan. FHA203(k) loans can be more expensive long-term but offer a better alternative to conventional rehab loans for clients not eligible.

Get Started Today

Land Run Mortgage provides the personal attention that every client deserves. Contact us today if you’re interested in a conventional rehab loan, or any other type of mortgage. We serve clients in Oklahoma City, Edmond, and the surrounding Oklahoma communities. We are happy to answer any questions you may have about conventional rehab business loan.

FHA 203(k), Loans vs. Conventional Rehab Loans

Editor’s note: This blog post was originally published November 2019, and has been updated to reflect industry changes.

Potential homeowners face many obstacles, such as limited availability, budget concerns and bidding wars. Many are buying fixer-uppers and rehab homes instead of renting or living with their family.

There are currently two types of government-backed loans for fixer-upper or rehab projects: Federal Housing Administration (FHA), 203(k), Limited, and Standard.

You can also choose from conventional options. Fannie Mae, the Federal National Mortgage Association also known as Fannie Mae offers its HomeStyle Renovation Mortgage. Another loan is the CHOICERenovation loan through Freddie Mac.

Like any loan product, there is a variety of factors that can help you decide which one is the best. These include income requirements, credit scores and mortgage rates.

 

It is important to consult a trusted and approved lender like Contour Mortgage when deciding which mortgage option is best.

We’ll be discussing the differences, qualifications, benefits, and differences between FHA203(k) loans, conventional rehab mortgages, and other types of loans.

FHA 203(k), Loan

This loan is offered by the U.S. Department of Housing and Urban Development. It is insured and backed by the FHA. These loans can only be offered by approved lenders like Contour Mortgage. However, they have slightly lenient terms that conventional mortgages.

Benefits include a substantial return on investment (ROI), due to value-added improvement, and a 3.5 percent down payment.

This loan is intended to assist borrowers in obtaining a fixed-rate or adjustable-rate mortgage. It includes the purchase of the property and its repairs.

This loan has two options as mentioned above.

  • Limited 203(k).

The FHA is primarily for non-structural works. Consumers can borrow up to $35,000 to pay for improvements, repairs and upgrades to their mortgage. Business loan can be used for cosmetic improvements such as flooring, bathroom and kitchen renovations, as well as plumbing and electrical work. The total cost of your project will be capped based on where you live.

  • Standard 203(k).

This loan is used to repair flood or fire damage from hurricanes. Its higher limits allow for more expensive rehabilitation projects.

  • Conventional Rehab Loans

FHA203(k) loans can be a viable option for anyone interested in a rehabilitation mortgage. However, conventional options are also available. Fannie Mae has its HomeStyle Renovation Mortgage and Freddie Mac offers the CHOICERenovation loan.

  • Fannie Mae Homestyle

This flexible loan is available as both an adjustable- and fixed-rate option. It helps borrowers make improvements to their homes and pay off other expensive methods. You can combine it with other Fannie Mae products.

HomeStyle Renovation Mortgages: Borrower and Loan Eligibility requirements: “Renovation expenses may be approved up until the lesser of 75% plus renovation costs or as-completed appraised values, and competitive rates which may be lower than a credit card, personal loan, or home equity line of credit (HELOC).

  • Freddie Mac CHOICERenovation

CHOICERenovation, unlike FHA203(k), can be used to renovate multi-unit homes as well as investment properties. You will also receive a 3.5 percent down payment and lower credit scores as well as debt-to-income ratios and debt-to income ratios (DTI). You can choose between a 15-year or 30-year term. However, depending on where you live, some restrictions may apply.

Consolidated Financing for Purchase or Renovation: Conventional Rehab Loan

Clients who are interested in buying or renovating property in Oklahoma City, Edmond, or the surrounding areas can use conventional rehab loans as a source of financing. Local mortgage professionals, the Land Run Mortgage team, offer flexible financing terms for conventional rehab loan home loan. We are a private lender that has extensive experience in conventional rehab loans and can offer clients fast approval. Conventional rehab loans simplify closing costs and reduce payments for homes that require structural or cosmetic rehabilitation. For more information on this financing option, or to make real estate investments, contact Land Run Mortgage.

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