FHA Financing for Fixer-Uppers

By
Real Estate Agent with Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales 3090099

 

You find a neat "fixer-upper," then learn that banks won't lend until the repairs are done, but the repairs can't be completed until the house is purchased!  This Catch-22 scenario can be solved by HUD's FHA-backed 203(k) "rehab loan," growing in popularity because so many foreclosure purchases are in dire need of repairs.Fixer-upper

This loan covers the cost of the home, plus money for repairs up to a maximum of $35,000!  To get the ball rolling, you'll need funds for the 3.5% required down payment, and then to find a suitable property.  Your real estate representative will prepare your offer, stating that you'll be seeking 203(k) financing.

Next you'll apply to an FHA-approved lender, including a sheet listing each repair and its cost.  Finally, an appraisal is performed to determine the value of the home once the proposed repairs are complete.

Upon approval, you'll have financed the home purchase plus all your proposed repairs (there's even a 10%-20% "contingency reserve" included to cover any unforeseen improvements).  At closing, the seller receives the purchase price, and the remaining funds go into escrow, to be disbursed to the contractor as work is completed (within six months).

Real estate agents support this loan program because it expands homeownership and revitalizes neighborhoods, but all you need to know is that it will get you into a very affordable home right now.

 

 

 

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Topic:
Lending / Financial
Location:
Florida
Groups:
The Lounge at Active Rain
1st Time Buyers
Advice for Buyers
Tags:
repairs
fixerupper
fha 203k loans

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Rainer
43,288
John Armstrong
Coldwell Banker Heart of America - Bloomington-Normal, IL

This is a great program for a fixer upper. It works much better than getting a construction loans.

Apr 04, 2010 11:57 PM #1
Rainmaker
360,972
Kevin Cavanaugh
Keller Williams Hudson Valley Realty - Tappan, NY
Lic. Associate Broker, ABR, GREEN

Gabe, that is a great tool to utilize for some  buyers.  Have a great day.

Apr 05, 2010 12:49 AM #2
Ambassador
1,971,671
Wanda Kubat-Nerdin - Wanda Can!
Prado Real Estate South - St. George, UT
So Utah Residential, Referral & Relocation REALTOR

That little home there could use a HUD FHA-backed 203(k) loan to get it pretty again. Thanks for the good read Gabe!

Apr 05, 2010 03:11 AM #3
Ambassador
1,551,419
Karen Kruschka
RE/MAX Executives - Woodbridge, VA
- "My Experience Isn't Expensive - It's PRICELESS"

Gabe  FHA 203K is a win win for both the purchaser and the community and I love your choice of photos

Apr 05, 2010 03:18 AM #4
Rainmaker
506,101
Cal Yoder
Keller Williams Elite - Lititz, PA
Homes For Sale in Lancaster PA - 717.413.0744

Gabe,

Have you ever completed one of these transactions. In theory I agree that they make a lot of sense. However, most folks do not relish the nightmare of paperwork required to actually get these deals done. What can you tell me?

Thanks,

Cal

Apr 05, 2010 11:00 AM #5
Rainmaker
4,200,897
Gabe Sanders
Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales - Stuart, FL
Stuart Florida Real Estate

Thanks for your comments, always appreciated.

Jun 12, 2015 04:26 AM #6
Rainmaker
4,200,897
Gabe Sanders
Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales - Stuart, FL
Stuart Florida Real Estate

Hi John, thanks for taking the time to comment it is always appreciated.

Feb 10, 2018 07:03 AM #7
Rainmaker
4,200,897
Gabe Sanders
Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales - Stuart, FL
Stuart Florida Real Estate

Hi Kevin, thanks for taking the time to comment it is always appreciated.

Feb 10, 2018 07:03 AM #8
Rainmaker
4,200,897
Gabe Sanders
Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales - Stuart, FL
Stuart Florida Real Estate

Hi Wanda, thanks for taking the time to comment it is always appreciated.

Feb 10, 2018 07:03 AM #9
Rainmaker
4,200,897
Gabe Sanders
Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales - Stuart, FL
Stuart Florida Real Estate

Hi Karen, thanks for taking the time to comment it is always appreciated.

Feb 10, 2018 07:03 AM #10
Rainmaker
4,200,897
Gabe Sanders
Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales - Stuart, FL
Stuart Florida Real Estate

Hi Cal, thanks for taking the time to comment it is always appreciated.

Feb 10, 2018 07:04 AM #11
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Rainmaker
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Gabe Sanders

Stuart Florida Real Estate
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