When considering a Fannie Mae Homestyle Renovation loan, it’s important to remember that the total loan amount (initial loan + renovation costs) cannot exceed the county limit.
In San Diego County in 2018, that county limit is $649,750. So for example, if you were buying a home for $550,000, and the estimated repairs were $150,000, that would equal an After Repair Value of $700,000. Now remember that these loans only require 5% down. However, because 5% of $700,000, would leave you with a loan amount of $665,000, you would be above the San Diego county limit. This would NOT work.
Your lender can only lend to the specified county limit. In San Diego county, that’s $649,750. So if you wanted to do $150,000 in renovations on this property, the amount above $649,750 would have to be paid for out of pocket.
The same principle applies to multi-unit properties, however they have higher county loan limits. In San Diego County, they are $831,800 for 2 units, $1,005,450 for 3 units, and $1,249,550 for 4 units.