Wanting to purchase a fixer upper home but don't have the cash for the repairs and/or upgrades??? Read below for a great financing option....the FHA 203K Loan. FHA's 203(k) program permits home buyers to finance up to $35,000 into their mortgage to repair, improve, or upgrade their home. 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 an FHA appraiser. . Home buyers can make their new home move-in ready by remodeling the kitchen, painting the interior or purchasing new carpet.
Purpose: Section 203(k) fills a unique and important need for home buyers. When buying a house that needs repair or modernization, home buyers usually have to follow a complicated and costly process. The interim acquisition and improvement loans often have relatively high interest rates, short repayment terms and a balloon payment. However, Section 203(k) offers a solution that helps both borrowers and lenders, insuring a single, long term, fixed or adjustable rate loan that covers both the acquisition and rehabilitation of a property. Section 203(k) insured loans save borrowers time and money. They also protect the lender by allowing them to have the loan insured even before the condition and value of the property may offer adequate security.
Eligible Activities: The extent of the rehabilitation covered by Section 203(k) insurance may range from relatively minor (though exceeding $5000 in cost) to virtual reconstruction: a home that has been demolished or will be razed as part of rehabilitation is eligible, for example, provided that the existing foundation system remains in place. Section 203(k) insured loans can finance the rehabilitation of the residential portion of a property that also has non-residential uses; they can also cover the conversion of a property of any size to a one- to four- unit structure.
The types of improvements that borrowers may make using Section 203(k) financing include: *structural alterations and reconstruction *modernization and improvements to the home's function *elimination of health and safety hazards *changes that improve appearance and eliminate obsolescence *reconditioning or replacing plumbing; installing a well and/or septic system *adding or replacing roofing, gutters, and downspouts *adding or replacing floors and/or floor treatments *major landscape work and site improvements *enhancing accessibility for a disabled person making energy conservation improvements