So you're in the market to buy a home but your credit is not great and you don't have much in the way of 
a down payment. But you're willing to see the potential of a house and you don't mind living for a few months in a home with major renovations going on. Now if the above description fits you then there is a loan program out there that would suit you. It's called the FHA 203k loan and here's now it works:
You only need 3 ½% down payment, which can be a gift from family members.
More flexible qualification requirements and competitive interest rates for those with less than perfect credit.
Assumable note with no prepayment penalties.
A single loan to cover both the purchase and the improvements of your home resulting in lower closing costs.
Rather than purchasing someone else's style you will have the opportunity to create your own.
Take advantage of all the great prices on foreclosed properties currently on the market.
Very often a bank won't lend the money to buy the house until the repairs are complete, and the repairs can't be done until the house has been purchased, a FHA 203k loan solves that puzzle.
So what repairs or renovations does it cover?
Repair/Replacement of roofs, gutters and downspouts
Repair/Replacement/upgrade of existing HVAC systems
Repair/Replacement/upgrade of plumbing and electrical systems
Repair/Replacement of flooring
Minor remodeling, such as kitchens, which does not involve structural repairs
Painting, both exterior and interior
Weatherization, including storm windows and doors, insulation, weather stripping, etc.
Purchase and installation of appliances, including free-standing ranges, refrigerators, washers/dryers, dishwashers and microwave ovens
Accessibility improvements for persons with disabilities
Lead-based paint stabilization or abatement of lead-based paint hazards
Repair/replace/add exterior decks, patios, porches
Basement finishing and remodeling, which does not involve structural repairs
Basement waterproofing
Window and door replacements and exterior wall re-siding
Septic system and/or well repair or replacement
A FHA 203k loan can also be used to purchase up to a 4 unit building.
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