Best mortgage for Rehab???

What does everyone think the best mortgage is for a rehab property with a 1-3 month time frame to sell? If the property is $180,000 and rehab costs are $20,000 is their a way to get a full mortgage for $200,000 so from that use the $20,000 for fix up? Thanks everyone.


First you need to know what the ARV is. Take that value and subtract $20k, off that number. Then subtract the rehab costs (labor and materials). This is your offer amount. This is a rule of thumb not a perfect science but it will put you in the ball park.

As far as getting finance you have several options. One of them is to find a hard money lender that will loan you the money to repair the place with the loan. This is there primary business, to loan to investors.

You can also look for a portfolio lender. This is usually a small, community/local bank that actually will keep the loan rather than selling it on the market. This will not be your 5/3 or US Bank. They keep the loan so it doesnt have to meet the requirements of conventional lending. They will usually lend 80-90% of the ARV so you need to find a property that you can buy for about 60% of its fixed value.


As mentioned before you will definitely need to know the after repaired value.

There are several rehab loans that may be able to accomodate your project.

Conventional Rehab Loans
Hard Money Rehab Loans
Soft Money Rehab Loans.

Would need to know more info.

Assuming that the value is something like $250K after all the repairs, you should have no trouble getting a loan for $200K. They will likely advance all of the funds at closing for the purchase, then put the other $20K on hold until the work is done. When it’s completed to the lender’s satisfaction, they will release the $20K.

I use a lender for exactly this thing, but they do require good credit and income and assets, etc. It’s not a pure “hard money” loan. Then again, the points and rate are very reasonable, too, so it’s worth the increased formality for the lower cost of funds.