Buyer Tip | 203K Loan Home Purchase / Renovation Solution
Posted by Laurie Randazzo on Mon, Feb 22, 2010 @ 06:02 AM
You found a "starter home" and it needs a ton of renovation. In fact, a "fixer upper", repairs must be completed before the bank will even lend the funds to purchase the home. The FHA 203k renovation loan program provides funds for both the purchase and renovation of a home packaged into one mortgage loan. Once the purchase of the home is closed, renovation funds are held in escrow to pay for pre-determined renovation work done by approved renovation contractors.
HUD's 203(k) program allows you to borrow funds for the purchase or refinance of a property plus the cost of making the repairs and improvements in one mortgage. It's a golden opportunity for buyers short on extra funds to complete the renovation. The FHA-insured 203(k) loan is provided through approved lenders nationwide and is available to owners who will occupy the home themselves.
Down payment, credit qualification, loan limits and other requirements are the same as standard FHA loans. Additional guidelines are set forth specific to 203k loans to provide for renovation of the home.
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