When a homebuyer wants to purchase a house in need of repairs or updating, he/she usually has to obtain financing first to purchase the home, additional financing for the construction, and then a permanent mortgage when the work is completed. Often the interim loans involve high interest rates and short repayment periods. The FHA Section 203(k) loan program was designed to address this situation!
The borrower can get just one mortgage loan, at a long-term fixed (or adjustable) rate, to finance both the acquisition and the rehab of the property. The mortgage amount is based on the projected value of the property with the work completed, taking into account the cost of the work.
What Properties Are Eligible?
To be eligible, the property must be a one- to four-family dwelling that has been completed for at least one year.
What Improvements Can I Make?
Luxury items and improvements are not eligible as a cost rehabilitation. However, the homeowner can use the 203(k) program to finance such items as painting, room additions, decks and other items even if the home does not need any other improvements. All health, safety and energy conservation items must be addressed prior to completing general home improvements.
Where Can I Get More Info?
The HUD website has a quite lengthy and somewhat intimidating details page here
An easier way is to give me a shout and I can put in you touch with one of my 203K lending partners. We work as a team and can help you get a 203K loan set up, find a home, and get you on your way to making it the home of your dreams! Mike 303-669-2744 x 5