Down payment assistance financing wanted for Michigan acquisitions and flips

Asked by westphalia1, Novi, MI Tue Jan 8, 2013

I am looking at some FHA HomePath homes for sale in southeast Michigan. The HomePath program will lend me a 70% LTV renovation loan for their REO homes for investors. I do not have the extra 30% and am looking for a source for it.State of Michigan MSHDA has a down payment assistance program but it is only good for owner occupied and not for non owner occupied.Any advice? Thanks, Dan at: westphalia1ATyahooDOTcom

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Ron Thomas, Agent, Fresno, CA
Tue Jan 8, 2013
Your plan has merit:
You're probably the only investor out there who wants to use someone else's money to buy and flip a house, and just pocket the profit.
I can't understand why there aren't 50 programs to help you do that.

This is the 2013 equivalent of the Klondike Gold Rush.
1 vote
Andy Hargrea…, Agent, Plymouth, MI
Tue Jan 8, 2013
I personally think you'd be best served to try to find someone willing in your family or circle of friends to work with. Hard money lenders are going to charge an arm and a leg in interest/fees -- making it hard for you to profit on the flip.
0 votes
westphalia1, Home Buyer, Novi, MI
Tue Jan 8, 2013
Thanks so far. Any idea as to who (in Michigan) is doing Hard Money loans at this time? And what their contact info is? Dan
0 votes
Shane Milne, Mortgage Broker Or Lender, South Jordan, UT
Tue Jan 8, 2013
You cannot use down payment assistance in conjunction with investment property financing using Fannie Mae loan programs - all funds used for down payment + the reserve requirement have to be from the borrower's own savings/assets. That is a guideline of the program you are looking to use.

However, you and another individual (who has the down payment funds) can go in it together, where you are both on the loan, and the down payment funds are sourced from the other individual you are going into on the deal with.

Or you can look into a hard money rehab loan, where the source of funds is much more flexible.

Shane Milne | Lending in all 50 states | NMLS #81195
0 votes
Andy Hargrea…, Agent, Plymouth, MI
Tue Jan 8, 2013
I list homes on behalf of Fannie Mae.

You are correct in that you are likely going to be unable to get down payment assistance for the type of scenario you're looking for - they are reserved for neighborhood stabilizations and owner occupants in a grant scenario.

You're likely either going to need to start smaller or find a group of investors to back you, as without the equity, you are a high risk situation for a lender.

You may want to start with a few small homes and try to build your funds and portfolio, taking gradual steps to purchase larger ones so you do have the 30% down. Additionally, the Homepath loan and FHA 203k loans require the work to be done by licensed contractors, so most of your possible equity on the flip is usually gained by doing the work yourself and saving on labor costs.
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