10 Percent Down Rehab Loan

10 Percent Down Rehab Loan

We offer many low down payment hard money rehab loan programs with as little as 10% of the purchase price as a down payment and 100% of rehab costs covered. Many Real Estate Investors prefer rehab loan financing programs with low down payments. This allows them to qualify without having to invest large sums of money whether they have it or not. We offer are many programs available with down payment as low as 10% of the purchase price. The problem for lenders is a low down payment rehab loan is a much higher risk. That is why in order to reduce that risk private lenders have underwriting guidelines that are more restrictive when compared with programs requiring a larger cash investment.

The 10 percent down rehab loan program allows experienced investors to qualify for as little as 10% down payment of the purchase price. The loan will fund 90% of the purchase price and up to 100% of the rehab costs. The funding of the rehab costs is limited. The total loan can not exceed 75% of the after rehab value. If the after rehab value is $200,000 then the maximum the loan could be is $150,000 (75% of $200,000 is $150,000).  If the purchase price is $100,000 the down payment is $10,000 (10% of $100,000 is $10,000). Then the maximum available for rehab is $60,000 ($150,000 maximum loan minus $90,000 for the purchase equal $60,000 available for rehab). Even first time real estate investors may qualify for the 10 percent down rehab loan if the have very good credit.

10 Percent Down Rehab Loan Benefits

The other guidelines beyond the down payment that are excellent  benefits of the 10 down rehab loan are as follows:

• Minimum Credit Score – 640 for 90% if you have completed 5 flips in the last 3 years,  700 if you have only completed 2 flips in the last 2 years, 720 if you have completed no flips in the last 2 years.
• Maximum Rehab – 100% up to 75% of the after repaired value with less than 5First time investors have a must have 15%to 20% of the purchase price for down payment unless their credit score is 720+ flips completed in the last 3 years. Otherwise, the maximum the maximum loan will be 70% of the ARV and rehab will be funded at 100% to the 70% of ARV.
• Reserves Requirement – three to six months of the monthly interest only payment.
• Loan must close in entity name
• Deferred Payments option available at 5 plus completed projects

The terms of this 10 percent down rehab loan include being: a twelve month interest only loan with no pre payment penalty (loan term up to 24 months available). Rates are from 10.% to 12.5% depending on loan to value, credit and the experience of the investor. Points are 2% to 4.5% depending on loan size. Minimum loan is $100,000 and the maximum loan is $2,000,000. Loans over $1,000,000 may require a larger down payment on the purchase price and up to 100% of rehab depending on experience.

Whether you are a seasoned investor or a first time investor, the 10 percent down rehab loan could be the best program for you as a real estate investor. When you compare the down payment, rate and points this may be better than the 100% financing or even a higher down payment program with lower rates or fees.