Can I get a conventional loan on a house that needs repairs?
Yes, you can get a conventional loan on a house that needs repairs, but the process may be a bit different from a typical home loan application. There are a few things to keep in mind when considering this option, so let's break it down.
What is a Conventional Loan?
A conventional loan is a mortgage that is not backed by the government, unlike FHA or VA loans. Instead, conventional loans are offered by private lenders and banks and typically require a higher credit score and larger down payment.
What is a House That Needs Repairs?
A house that needs repairs could mean anything from minor cosmetic upgrades to major structural issues. If you're considering purchasing a home that needs repairs, it's important to have a professional inspection done to determine the extent of the repairs needed.
Can You Get a Conventional Loan on a House That Needs Repairs?
The short answer is yes, you can get a conventional loan on a house that needs repairs. However, there are a couple of options you may want to consider:
- Renovation Loan: A renovation loan, such as the Fannie Mae HomeStyle loan, allows you to purchase a home and borrow additional funds for renovations. This type of loan typically requires a higher credit score and larger down payment.
- Conventional Loan with Escrow: Some lenders may offer a conventional loan with an escrow account for repairs. This means that a portion of your mortgage payment will go into an escrow account that will be used to pay for repairs as they are completed.
What Are the Requirements for a Conventional Loan on a House That Needs Repairs?
The requirements for a conventional loan on a house that needs repairs will vary depending on the lender you choose. However, here are some general requirements you can expect:
- Good Credit Score: You'll typically need a credit score of at least 620 to qualify for a conventional loan.
- Large Down Payment: Depending on the extent of repairs needed, you may be required to make a larger down payment than a typical home loan.
- Proof of Income: You'll need to provide proof of income to ensure you can afford the monthly mortgage payments.
How to Find a Lender for a Conventional Loan on a House That Needs Repairs?
Finding a lender that offers conventional loans for homes that need repairs may require a bit of research. Here are some tips to help you find a lender:
- Ask for Referrals: Reach out to friends, family, or real estate professionals for referrals to lenders who have experience with renovation loans.
- Research Online: Use search engines to find lenders in your area that offer renovation loans or conventional loans with an escrow account for repairs.
- Consult Mortgage Brokers Pro MortagePro Mortgage Company: Mortgage Brokers Pro is a well-known provider that specializes in offering conventional loans for houses that need repairs. They have a team of experts who can guide you through the process and find the best loan option for your needs.
Pros and Cons of Getting a Conventional Loan for a House That Needs Repairs
Pros:
- Allows you to purchase a home that needs repairs without having to pay for renovations out-of-pocket.
- May offer more flexibility in terms of the types of repairs you can make to the home.
- Typically has lower interest rates than other types of loans.
Cons:
- Requires a higher credit score and larger down payment than other types of loans.
- Can be a more complicated process than a typical home loan application.
- May require more documentation and inspections than other types of loans.
Tips for Applying for a Conventional Loan on a House That Needs Repairs
Applying for a conventional loan on a house that needs repairs can be a bit more complicated than a typical home loan application. Here are some tips to help you prepare:
- Get a Professional Inspection: Before applying for a loan, get a professional inspection done to determine the extent of repairs needed.
- Be Prepared to Provide Documentation: You'll likely need to provide more documentation than a typical home loan application, such as a detailed renovation plan and contractor bids.
- Work with an Experienced Lender: Working with a lender who has experience with renovation loans can help simplify the process.
Conclusion
In conclusion, getting a conventional loan on a house that needs repairs is possible, but it does require some extra research and preparation. By working with an experienced lender like Mortgage Brokers Pro and being prepared to provide documentation, you can successfully finance your dream home and make the necessary repairs to turn it into a reality.