FHA 203K loans are perfect for those of us who fall in love with a great house that has this Gosh Awful Shag Carpet!  This carpet would give you a headache!  How can you buy the house if you don’t have an extra $5000 to update that 1970′s carpet, green countertops, and linoleum?  If the property is under the FHA loan limit in your county, you can purchase it with a FHA 203K loan.

Let’s say you negotiate a sales price of $100,000.  With a traditional FHA mortgage loan, you would need to put 3.5% of the $100,000 into the downpayment.  With this special FHA mortgage program, designed for REHABS, you can add up to $35,000 for “updates.”  This means that if you negotiate a price of $100,000 and you need an additional $5000 for the updates…  we base the 3.5% downpayment on $105,000!

It’s a GREAT program for folks who need to update a property!  The main things to remember are:

• You can add a minimum of $5000 to the purchase price for improvements, including appliances.
• You can not change the “footprint” of the house.
• You can not borrow more than $35,000 for improvements.
• The property must appraise for the improvements plus the purchase price, or “after improvement” value.
• Qualifying is the same as with traditional FHA loans, so you need to have at least 2 credit scores above 600.
• The after improvement value can not exceed the maximum loan amount for your county.
• The checks for improvement will be going directly to the entity doing the work, only in RARE occassions will this be the homebuyer.
• Great loans for folks purchasing foreclosed property!
• FHA is not a loan for Investors, with the exception of those purchasing a HUD foreclosed property – when HUD allows an FHA mortgage as part of the contract.

If you have questions about a 203K loan in NC, please contact Steve and Eleanor Thorne at Corporate Investors Mortgage Group, Inc  919-649-5058.