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Buying a House that Needs Renovation – Look at FHA’s Rehab Loan

For all potential home owners, I wanted to let you know about a little known FHA program that allows you to purchase a home and get renovation funds at the same time. It is called the FHA 203 (k) loan program.

Under this program, an owner-occupant can borrow money for the purchase and renovation while putting as little down as 3.5%.

The program requires that the buyer use licensed contractors. Interestingly, the renovations can be for structural AND cosmetic improvements to the property.

From what I understand the application process is not easy. But, I am hearing that it is worth the time and effort. In 2008, FHA issued about 6,700 of the 203(k) loans. This year, more than 11,000 loans have already been insured. Pretty Amazing!

What is even more amazing would be combining this with the $8,000 First Time Home Buyer Tax Credit and/or the Federal Energy Efficiency Tax Credit (up to $1,500). That would be quite a package.

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Posted by Team Jodi - Chapel Hill Real Estate, Durham Real Estate on 08/19/2009 01:40 PM

Comments (4)

Rehab Loan in the Mortgage / Finance Channel

first time home buyer tax credit, energy efficiency tax credit, rehab loans

4 Comments on Buying a House that Needs Renovation – Look at FHA’s Rehab Loan

AUG

I think the only problem is the time element. Normally can take 60 days+. Some sellers won't wait on this one.

AUG

I've done several of these this year - having the right team working on it makes a lot easier! You have to do at least $5000 in repairs (for the 203K Streamlined program) and no more than $35000. The repairs can include appliances if you can find an appliance company willing to adhere to the draw program.

Great to see that there are programs like this to help people into homes. A home needing a little rehab work can often be a big money saver for someone trying to get their first home or to get out of a rental.

AUG

Elenor,

I am thrilled to hear that you have done some of these loans. Would you like to to a short video about this that I can put on my web site?

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