FHA has an “old” program that’s being used in a “new” way!
The FHA 203K program is designed to help folks purchase homes that need a few repairs… and frankly, many properties that are purchased after a foreclosure, are perfect for this program.
Folks who lose their home in foreclosure generally did not have extra money to do some of the upkeep and repairs that needed to be done in the past few years. So you can get a “deal” on the home – but it really needs to be updated!
With the 203K program here’s what you can do:
- Purchase home with 3% down (until the end of the year when it goes to 3.5%).
- Make up to $35,000 in repairs.
So, if you purchase a home for $100,000 and it needs $20,000 worth of repairs… you would get a quote from the contractor (honestly does not have to be a licensed contractor), and we get an appraisal based upon the “future value.” Let’s say the appraiser agrees that you are going to have a property worth $120,000 once these repairs are done. We will base your loan on the $120,000 – the contractor gets $10,000 at closing (half of the repairs), and will get the remainder at the time they have it all finished.
No “Major” structural work can be done with this loan – so it’s not for adding a kitchen.
Have a few more questions? Give us a call!
About Eleanor
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Nice job. I completely agree with you.
Applied for a loan must have been submitted as conventional loan, should have been processed as purchase as is–asked to put up escrow–they stated no–loan officer stated the 203k loan would take too long to process–trying to close–any answers
Bertha – the 203K loan does take a little longer to process, simply because you have to get the letters from the contractors. Doing an “as is” loan when there are repairs that need to be done is difficult if not impossible. If the property was owned by Fannie or Freddie there are renovation loans for those properties. Call us if we can help!