FOR THE EXISTING HOMEOWNER
USING THE WELCOME BACK HOME LOAN PROGRAM
TO PURCHASE, RENOVATE AND/OR REBUILD

The following explanation by steps will help you to determine how much you can borrow to renovate your home and refinance your first mortgage loan in connection with the renovation based on the Welcome Back Home Loan Internal Revenue Code requirements. After you determine your potential loan amount and whether you may be able to refinance that first mortgage, then you must check with our participating lenders to see which of the FHA/VA, Fannie Mae or Freddie Mac loan programs best fit your situation. Participating Lenders

The first step to find out how much you may be able to borrow is to determine which loan pool of the Welcome Back Home Loan Program you qualify for. While the Welcome Back Home Loan Program is designed to help families in all income categories, two-thirds of this $25,000,000 mortgage loan program is targeted for families of 3 or more with annual incomes of $73,220 and families of 2 or less with annual incomes of $62,760. The remaining one-third of this program has no income limitations. Each participating lender in the Welcome Back Home Loan Program is therefore required to originate $2 of its total loan allocation to the families within the target family incomes stated above for every $1 of loan proceeds made to a higher income borrower. While the higher income borrower may realize an inconvenient delay, especially in the initial phases of the Welcome Back Home Program, the process guarantees that the families of the targeted incomes are served first.

The second step to find out how much you, the existing owner, may be able to borrow to renovate is to decide whether you want to refinance the first mortgage loan on your home in connection with the renovation or rehabilitation of your home. Yes, you may refinance your first mortgage loan at the lower Welcome Back Home Loan mortgage rate provided that your property and intended renovation comply with the following ‘qualified rehabilitation’ rules:
(1) your home was originally built at least 20 years ago;
(2) you will be spending 25% or more of, what the IRC calls, your adjustable basis (i.e., original purchase price plus
     the cost of improvements to the home since you have owned it), and
(3)(i) 75% or more of the existing external walls are retained in place as internal or external walls; (ii) 50% or more
     of the existing external walls are retained in place as external walls; and (iii) 75% or more of the existing internal
     structural framework of such building is retained in place.

We realize that these rules are complicated but they are the IRC guidelines to how you may meet the refinancing exception so that you can refinance that first mortgage loan at the lower Welcome Back Home mortgage loan rate.

If your first mortgage is already paid off, you can use the Welcome Back Home Loan Program to borrow up to $150,000 to renovate your home provided that your renovation consists of alterations, repairs, and improvements that substantially protect or improve the basic livability or energy efficiency of the home. With this renovation loan you will probably be restricted from adding on or moving several walls. If you need to add on or move several walls you may be limited to the ‘qualified rehabilitation’ loan described above even though you do not need to refinance a first mortgage loan.

This explanation of how to use the Welcome Back Home Loan Program by steps will help you determine how much you can borrow to renovate your home and refinance your first mortgage loan in connection with the renovation based on the Welcome Back Home Loan Internal Revenue Code requirements. After you determine your potential loan amount, then you must check with our participating lenders to see which of the FHA/VA, Fannie Mae or Freddie Mac loan programs best fit your situation. The Welcome Back Home Loan Program funds will then be applied to the FHA/VA or conventional loan program that you qualify for.

Participating Lenders

Examples

I paid off my first mortgage and now need money to renovate my home. Can the Welcome Back Home Low-Interest Loan Program help me?

If your first mortgage is already paid off, you can use the Welcome Back Home Loan Program to borrow up to $150,000 to renovate your home provided that your renovation consists of alterations, repairs, and improvements that substantially protect or improve the basic livability or energy efficiency of the home. With this renovation loan, called ‘home improvement’, you will probably be restricted from adding on or moving several walls. If you need to add on or move several walls you may be limited to the ‘qualified rehabilitation’ loan described in the second step above even though you do not need to refinance a first mortgage loan. To qualify for the Welcome Back Home Loan Program you will also have to demonstrate sufficient income and credit reliability to qualify for an FHA/VA or conventional loan program and you intend to make the property your family home.

I still have a mortgage on my home and I want to borrow more money to renovate because the insurance money I received is not sufficient to complete the renovation. Can the Welcome Back Home Low-Interest Loan Program help me?

Yes, you may refinance your first mortgage loan at the lower Welcome Back Home Loan mortgage rate provided that your property and intended renovation comply with the following ‘qualified rehabilitation’ rules:
(1) your home was originally built at least 20 years ago;
(2) you will be spending 25% or more of, what the IRC calls, your adjustable basis (i.e., original purchase price plus the cost of improvements to the home since you have owned it), and
(3)(i) 75% or more of the existing external walls are retained in place as internal or external walls; (ii) 50% or more of the existing external walls are retained in place as external walls; and (iii) 75% or more of the existing internal structural framework of such building is retained in place.

If your home or the type of renovations you want do not meet any one of these ‘qualified rehabilitation’ rules, you cannot refinance the first mortgage and you will probably have to use your insurance proceeds to first pay off your first mortgage and then use the Welcome Back Home Loan Program to get up to $150,000 mortgage loan to renovate under the ‘home improvement’ rules. Under the ‘home improvement’ rules you will probably be restricted from adding on or moving several walls. ‘Home Improvement’ generally means renovating within the context of the four existing walls of your home.

I need to demolish my home and build a new one. Can the Welcome Back Home Low-Interest Loan Program help me?

Yes, you can borrow up to the maximum purchase price limits of $289,704 for a single family home (or $370,884 for a double, $448,313 for a three-plex and $557,144 for a four-plex) provided that you do not have a first mortgage already on the property. To qualify for the Welcome Back Home Loan Program you will also have to demonstrate sufficient income and credit reliability to qualify for an FHA/VA or conventional loan program and you intend to make one of the units in the property your family home.

For more information on any of our programs, please call
(504) 524-5533.