Buy it and fix it with one loan using Purchase and Renovate Financing!
Are you a home buyer or investor interested in purchasing a property but lack the available capital to both 
buy and fix it up? Well maybe you can get moving with Purchase and Renovate Financing.
It is well known fact that homes in top condition sell for more and that there are many good homes on the market that may not be in top shape yet offer value for an investor or homeowner. With Purchase and Renovate financing a buyer can originate an FHA mortgage and pay for repairs in one fell swoop using a loan product called a 203k Purchase a Renovate loan. Using the program buyers can borrow the improved value of the home and use the difference between that and the market price to pay for things such as:
- Carpet & Paint
- Appliances
- New furnace and air conditioning
- Geothermal heting and cooling
- Roofing
- Finish drywall stage builder abandoned real estate
- Finish a basement
- Build a garage
- Fix a foundation
- The possibilities are almost limitless!
This is a tremendous program for buying an older home and bringing it up to date, taking advantage of a bank foreclosure or short sale that might need work, adding new windows to your purchase or building the kitchen of your dreams in your new home, town home, acreage, condo or investment property.
For home buyers the program is called a 203k loan, for repairs $35,000 and higher, and a 203k streamline loan for non-structural repairs under $35,000. Buyers must meet FHA requirements such as:
- 620 credit score
- No bankruptcy in the last 2 years
- No foreclosures, short sales or deed in lieu's in the last 3 years
- No open judgments
- Minimum 3.5% down
- Maximum 6% seller contribution
Basically you submit an offer to purchase contingent upon obtaining a 203k, get bids for your repairs from a qualified contractor, get an after repair value appraisal from the lender, close on the loan, and complete the repairs with 6 months. The process of course makes the closing a little longer, around 60 days, but the 203k program can allow you to do remodels and improvements that just would not have been possible any other way.
For investors the loan is a conventional loan requiring 5% of the improved value down but it works in much the same way as the FHA product. Loan guidelines follow Fannie Mae procedures and require:
- 680 credit score
- Max limits based on conforming loans
- Renovation not exceed 75% of total loan amount
- 3 months PITI in cash reserves
There are some additional costs ranging from around $200 for a simple project to $1500-$2000 for a more complicated multi-stage project. These costs can be financed into the loan however.
If you'd like more information or to speak to a lender about this exciting loan product please just call or email and you could be on your way to purchasing that dream home or investment property you never thought you could afford!
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