Are buyers allowed to pick what repairs need to be done on a Homepath Renovation loan?

Asked by Mike Bolaski, Temecula, CA Sat Aug 13, 2011

Can buyers pick and choose what needs to be done? Or is it just the items required to bring the condition from poor to average (via appraisal).

Also.....does the appraisal happen first and then the contractor bid? Or does the buyer just determine what they want done and have the contractor bid done?

Someone help me out here

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Deborah Garv…, Mortgage Broker Or Lender, San Diego, CA
Wed Aug 17, 2011
Tyler, Daniel did a nice job of listing the parameters of ths HomePath, let's answer your question. With only 35K available on the HomePath Renovation loan, the first requirements are going to be to correct any deferred maintainence or defects in the property to pass muster for mortgage financing. IF there is any "leftover", the borrower could elect to do some additional upgrades. In short, required items will take precedence.

There are lots of benefits to the HomePath loan (like the 3.5% closing costs credit for owner occupied properties currently offered, no mortgage insurance is a definite plus and the ability to purchase as an investor with only 10% down is killer). However, the downside of having to purchase a specific FannieMae Home severely limits the potential for a prospective home buyer. I would recommend buying a HomePath home if a client wanted to buy THAT specific home anyway (investor, different story...there may be reasons to shop for a HomePath property).

If a borrower is interested in upgrading a property, I much prefer the FHA 203K loan. Of course, the deferred maintainence and defects must be corrected just as with the HomePath Renovation Loan; however, the borrower has much, much more latitude with what improvements they can make to the property. With the exception of luxury items (no new swimming pools), the sky is pretty much the limit. As long as the project "pencils" to no more than 110% of the future value of the property, the borrower can call many of their own shots.

On the 203K loan: Interview and report by FHA consultant preceded contractor. Contractor bid next. Third, appraisal "as is" and as "future value" adding FHA consultant report and contract plans and specs. Any questions, please feel free to contact me. I specialize in the 203K and have written several blogs about the product and opportunities. Best to you!
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Daniel Fisher, Agent, Charlotte, NC
Sun Aug 14, 2011
HomePath Renovation Mortgage allows a borrower to purchase a property that requires light to moderate renovation. The one loan amount includes both the funds for the purchase and renovation - up to 35% of the as completed value, no more than $35,000.

Benefits to You, the Borrower

•Low down payment and flexible mortgage terms (fixed- rate or adjustable-rate).
•Down payment (at least 3 percent) can be funded by the borrower’s own savings; a gift; a grant; or a loan from a nonprofit organization, state or local government, or employer.
•Renovation amount based on appraisal “as completed” value.
•No mortgage insurance; ask your lender for cost details on loans without mortgage insurance.
•Expanded seller contributions for closing costs allowed.
•Available for primary residences, second homes, and investment properties.
•Many condo project requirements are waived; ask your lender for details.
•For more information about the renovation process, contact a HomePath Renovation Mortgage lender.
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