What Is a Homepath Renovation Mortgage?

Homepath Renovation Mortgages are available for Fannie Mae foreclosed properties.

A renovation mortgage is a mortgage that wraps the costs of small renovations and repairs into the total loan amount on a property. For select foreclosed properties under the Fannie Mae program, the Homepath Renovation Mortgage is an available loan product.

Significance

A homeowner interested in a Fannie Mae foreclosure property listed at $135,000 that requires $10,000 in renovations could close on a $145,000 loan and have the renovation cost wrapped into the mortgage at closing. The amount of eligible repairs will be on a case-by-case basis and is determined based on the borrower's credit history as well as the estimated cost for all renovations to a property, but should not exceed the total value of the property itself.

Down Payment

The down payment percentage on a Homepath Renovation Mortgage is set at 3 percent as of September, 2010.

Interest Rates

Buyers can select either a fixed rate or variable interest rate when selecting a renovation loan. The interest rates on Homepath mortgages will normally be competitive with market rates for home equity loans or lines of credit.

Property Eligibility

Only properties that had a loan serviced by Fannie Mae are eligible for Homepath Financing. This excludes Department of Housing and Urban Development (HUD) or Veteran's Administration (VA) foreclosures.

References

• Fannie Mae: Home Path Financing
• Mortgage Loan Place: Fannie Mae HomePath Rennovation or FHA 203K Loan?