What is a rehab/renovation/remodel loan?
A home rehab loan is used to rehab, renovate or remodel a residence. Some conventional rehab loans are purchase mortgages that include extra cash to be used for renovation. However, these loans are typically refinances with cash-out. These can be in first lien position if there is not an existing mortgage on the property or they can take second position behind an existing first mortgage. Many people know these mortgages as home equity loans. (HELOC is a different product, being a credit line.)
Use the Construction Lender Search Engine above, to find rehab lenders that will fund a loan for a renovating or remodeling a home. These loans are available for the home in which the borrower lives. There are many lenders that offer rehab loans for investment properties as well. These are popular with real estate investors that flip houses. Both types of lenders will be included in the Lender Search Engine above.
Homebuyers may consider taking out an FHA 203(k) rehab loan from a mortgage lender for a home that will be their primary residence. An FHA rehab loan offers up to $35,000 more than the purchase loan amount that can be used to fund rehab, renovation or remodeling projects. This money can be used to pay for things, such as roofing, windows, energy-efficient heating and cooling and foundation repair.
Real estate investors engaged in flipping often require mortgages to pay for renovation and remodeling in preparation to sell the rental or investment home. Residential Private Money lenders cater to this group and have different rehab loan requirements than conventional lenders. The investor can get a purchase rehab loan to buy the property and to pay for renovation, all in one. Hard Money rehab loans typically don’t require ownership seasoning before the borrower is able to do a cash-out refinance. This loan works for the real estate investor that paid cash for the purchase and then needs money for a short-term rehab and renovation.
What are some common types of remodeling, renovation or rehab home loans?
- Equity-driven, no min. FICO, up to 65% LTV
- Finance purchase and rehab funds, fixed rate, no prepayment penalty
- Home builder and developer loans up to 80% of purchase and renovation costs subject to 65% ARV
- Acquisition or renovation funding. Up to $5M, 10%-11% interest rate for renewable 12-month term
- Refinance SFR or condo up to 70% LTV, fixed interest rate, interest-only repayment schedule
- $50,000-$12,000,000 loan amounts, all property types and conditions, investment or vacation home, no credit needed, 7-day close
- Fast flexible funding for rehabs and remodels, up to 85% LTV on purchase and 100% of rehab cost, up to 75% ARV
- 30-year fixed FHA at 96.5% LTV, VA rehab loan at 100% LTV, USDA at 100% LTV, conventional at 95% LTV
Are there rehab, renovation or remodeling loans for mixed-use and commercial properties?
Yes. You can find commercial lenders on LenderSearch.com for rehab loans for apartment buildings, and equity driven fast funding.