Rehabilitation Loans

Rehab Loans Help You Create the Home of Your Dreams

An increasing number of homebuyers are interested in purchasing homes in need of rehabilitation or renovation, either to live in or sell for profit. There are both conventional (privately insured) and nonconventional (government-insured) loan options available to cover the cost of purchase and rehabilitation for qualified borrowers. If you live in Gig Harbor, WA, (Pierce and Kitsap counties) and are interested in undertaking a fix-and-flip project or rehabbing a home for your own use, Debbie Mishko at American Pacific Mortgage can help.

Fannie Mae HomeStyle

One popular type of renovation loan is Fannie Mae’s HomeStyle Loan. HomeStyle loans may be used to purchase and rehabilitate a home or to refinance an existing conventional loan to raise funds for home improvements. Fannie Mae is a government-sponsored entity (GSE), but not an official division of the federal government. When you take out a HomeStyle loan, a portion of the funding is designated for rehabilitations only and held in an escrow account. To get approved for this rehab loan, you should have a credit score of at least 620 and raise at least 5% down payment (if you are purchasing a primary residence). You must also submit paperwork from a contractor showing a cost estimate and a detailed plan for rehabilitation work.

Cash-Out Refinance and HELOC

Cash-out refinance is one way to raise cash for rehabilitations to your existing home. A qualified mortgage loan officer, like Debbie Mishko, will help you take out a new, refinanced conventional mortgage for a higher value, and you will receive cash funds for improvements. In exchange for your cash payout, your new mortgage may have a longer repayment term, higher monthly payments, or a combination of the two.

HELOC is a home equity line of credit: a financing contract the provides continuous cash flow for long-term renovation projects.  With HELOC, your home is used as collateral, so you give up some or all of your home equity until your loan is repaid.

FHA 203(k) Loans

FHA 203(k) rehab loans are one of the easiest types of renovation loans in terms of qualifying requirements. They are regulated and insured by the Federal Housing Administration. There are two types of FHA 203(k) loans: limited and standard. Limited 203(k) loans are for renovations only up to $35,000. Standard FHA 203(k) loans are available for a minimum of $5,000 and a maximum of the lesser of the two between: the FHA loan limit in Pierce County and the as-is value of the home plus the costs of repairs.

Take a Closer Look at Rehab Loans

If you’re interested in learning more about these or other types of rehab funding solutions, Debbie Mishko at American Pacific Mortgage has answers for you. Contact Debbie to see which rehab options you qualify for and to take a closer look at which home financing solution will help you achieve your long-term goals as a homeowner. Debbie helps clients in Gig Harbor and throughout Pierce and Kitsap counties, so call her to schedule a consultation today.