A good number of homes that are for sale might need some repairs prior to moving in, especially if it is a short sale or foreclosed. However, we’ve all learned to never judge a book by its cover, especially if the home needs some TLC. To help finance the repairs, you should look into an FHA 203k loan.
Check out our video on FHA loans here:
FHA 203k loans are grouped in two different types of loans: FHA Streamline 203k loan program and the FHA 203k loan. Qualifying for the 203k loan will be the same as obtaining a regular FHA loan. Repairs and construction won’t start on the home until the loan closes and an escrow account is set up to pay the contractors.
A 203k streamline loan is a limited repair program and allows repairs ranging from $5,000 to $35,000. The loan will cover the purchase price of the home plus the amount that is needed for repairs. Most of the repairs on the streamline loan can be considered “cosmetic” and a HUD consultant is not required as well, which makes the process a bit simpler.
FHA 203k loan programs can be used to finance the improvements that are needed like new roofing as well as the improvements that are wanted like new hardwood flooring. The appraised value of the home can also go up to an additional 10% over after the improvements.
So if you are on the market for a new home and want to show it some TLC, consider a 203k loan. Do you qualify for a 203k loan? Did you find the perfect house that needs some work? Contact one of our mortgage professionals at 973-577-7008 and let them help you create your picture perfect house.