Unconventional Mortgages and Loans

Purchase and Rehab -  After Repair Value Hard Money Loan

  • Refinance/Rehab loan
  • Purchase Loan

For an After Repair Value hard money purchase loan, 75% of the purchase price plus 100% of the rehab cost. – this total dollar amount must not exceed 70% of the ARV (after repair value).

  • Hard Money ARV Rehab Loan

This pertains to where the borrower already owns the property and is looking for cash out to rehab the property. If there is a current lien on the property, then that lien plus the loan closing costs and any potential fees would be based on the current as-is value. The rehab and any interest reserves would be based on the After Repair Value.

  • After Repair Value Example

For a rehab loan here in California, the existing mortgage note lien balance is $1,000,000, the current as-is value to cover this would need to be $1,428,571. You would calculate that by taking the dollar amount of $1,000,000 and dividing that by 70%. Now the borrower needs $500,000 to rehab the property. Add the $500,000 to the $1,000,000 and divide that number by the 70%. So for the "after repair value" hard money lender to pay out the $500,000 in rehab cost, the ARV would need to be, at minimum, $2,142,857.

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