FHA 203(k) Loan UPDATE

By
Real Estate Agent with COLDWELL BANKER RESIDENTIAL BROKERAGE
FIXER UPPER CONVENIENCE

If your buyers have been passing on buying a home because of the expense of anticipated cosmetic repairs, they may be missing out on a great opportunity. Sure, it used to be that if you bought a home and then applied for a home equity loan to pay for repairs, the result would be two separate loans (or worse, a mortgage plus a short-term loan for repairs that often had a much higher interest rate). This is not the case anymore if you qualify for an FHA Streamlined 203(k) loan.

The Department of Housing and Urban Development's FHA Streamlined 203(k) loan allows qualifying home buyers to finance up to an additional $35,000 into their mortgage to improve or upgrade their home before move-in. With this product, home buyers can quickly and easily tap into cash to pay for property repairs or improvements, such as those identified by a home inspector or FHA appraiser. And the best part is, the additional funds are combined into your mortgage, so you only have to worry about one loan.

There are, of course, rules and guidelines to follow, and not every repair qualifies. Talk to your financial person for more details.

Comments (3)

Kirk Williams
Private Venture Capital - Everett, WA

The 203k is a great tool in today's real estate market. It is not that difficult to do and as long as you set the expectations properly and as long as everyone knows the time to close can take up to 60 days (unless unforeseen property issues crop up) it should be an uneventful transaction.

Great post.

Oct 24, 2009 04:48 AM
Theodora Wu
TJ Investments - Burien, WA

Sounds like a good program for home owners.  Can this be used by investors as well?

Oct 24, 2009 04:50 AM
Jeff Onofrio
AnnieMac Home Mortgage - Mount Laurel Township, NJ
FHA 203k Lender and Homestyle Reno Specialist

I just wanted to respond to the question about whether you can use the FHA 203K for investment properties and the answer is no.  The FHA 203K rehab program is for primary residences only.  I get calls all the time from people trying to use the FHA program for investment properties.  So again the answer is no! FHA is for primaries only!

There is a program that Fannie Mae has that you can use for rehab called HomeStyle but you are required to have a larger down payment then the FHA program. 

Good post!

 

Nov 10, 2009 02:39 PM