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No Down Payment? Use Sweat Equity!

The Secret to Making Sweat Equity Work for You!

FHA loans and Freddie Mac HomePossible® loans allow a borrower to furnish labor and/or materials on a property being purchased up to the amount of the entire cash investment, including the down payment and closing costs. But it only works if you follow the rules!

Eligible Work/Repairs

  • Existing: Buyer can perform only the repairs or improvements that are listed on the appraisal.
  • Proposed:
    • Work to be performed must be broken down with value assigned to each item in sales contract.
    • Appraisal must be done before any sweat equity items are completed.

 

Ineligible Work/Repairs

  • Existing: Work completed before appraisal is done.
  • Proposed: Work completed before appraisal is done. Clean up, debris removal, or general maintenance.

Labor Value Determination: 

  • Existing: Appraiser or cost estimating Service, must provide the allowable contributory value of each item performed.
  • Proposed: Appraiser or cost estimating service estimate must provide the allowable contributory value of each item performed.

 

Material Value Documentation

  • Existing: Receipts and proof of source of funds to purchase materials.
  • Proposed: Receipts and proof of source of funds to purchase materials.

Final Inspection

  • Existing: Appraiser must inspect and state all repairs or improvements completed in a workmanlike manner.
  • Proposed: Appraiser must inspect and state all sweat equity work is completed in a workmanlike manner.

 

source: Mortgage Currentcy

Questions? Let's talk today!

We can help navigate you through your home buying process. We can review your details and help guide you to the home loan that works best for you!

The information provided has been based on rules and regulations issued by Federal Agencies and interpreted for you. Interpretations are not guaranteed, but we attempt to make them easy to understand. Check with us directly and we can clarify any information that pertains to your financing needs.
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