In today's market I encounter a lot of Buyers who are enamored by the potential deals surrounding Foreclosures and Short Sales in and around Knoxville TN. If these Buyers do not have the cash to put down to obtain a conventional loan nor have the cash to put into repairs/remodeling after closing this could be the end to their dream. This is because properties that are in distressed condition or need a lot of repairs will most likely not qualify for standard FHA financing.
However, there is a great loan option out there for buyers who only have 3.5% to use as a down payment but still want to purchase a distressed property to repair called a FHA 203K streamline program. The FHA 203K loan, often referred to as a rehab loan allows borrowers to purchase a home in need of repairs or refinance their existing their home for the purpose of remodeling a mortgaged property. As part of this program the borrower can actually finance a maximum of $30,000 into their mortgage to make improvements on their new home.
The highlights/requirements of this program include:
- Min 640 credit score
- 3.5% down payment min on all purchases
- Mortgage Insurance required
- Ability to finance up to $30,000 for repairs (must be completed by a licensed contractor and contractor credentials, experience, and reference are required.
- Available for purchase/refinances of single family residences (including HUD homes)
- A single closing allows the rehabilitation funds to be escrowed and disbursed as work/repairs are completed.
- Can be used to update homes/pay for higher cost items.