FHA 203(k) Rehab Loan - a loan to help that "Fixer Upper" you just found

Have you found a home to purchase which you think would be just perfect, if only you had the extra cash to rehab it and bring it up to livable standards?

It can be hard for many to come up with a substantial Down Payment and Closing Costs for a new home, so how does anyone have money left over for repairs that might be necessary?


The FHA 203(k) Rehab Loan could be exactly what you are in need of.  Read below:

Home buyers thinking of purchasing a distressed property in need of repair, but who are concerned that the cost of the repairs could drain their savings account may qualify for the Federal Housing Administration’s (FHA) 203(k) rehabilitation program.

• The FHA’s 203(k) rehabilitation program provides loans for covering renovation costs as well as the purchase price of the primary residence.  Investors are not eligible for this program.  Additionally, similar to traditional FHA loan programs, the rehab program allows for a down payment of as little as 3.5 percent.
  

• A common misperception about the program is that the house needs to be unlivable.  Realistically, the property just needs to be outdated, according to a lender familiar with the program.  The property “just has to appraise below market value and then at market value with the repairs.”
  

• Improvements deemed “luxury” are ineligible; however, the program has a wide range of definitions for “repairs” and “modernization.”  Covered repairs include items such as a new roof or heating system, as well as decorative changes, like replacing vinyl with ceramic tile on the kitchen floor or painting the interior.
  

• In addition to putting down at least 3.5 percent of the current value of the property, buyers also must use a HUD-approved lender, appraiser, and a contractor approved by the lender for the repairs.  One list of approved businesses can be found at 203kcontractors.com.
  

• Borrowers considering the FHA rehab loan program should be aware that loan rates typically run around a percentage point higher than conventional loans, and come in 15- to 30-year terms, either fixed or adjustable.  Additional paperwork for inspection, appraisal, title updating, and the like can increase closing costs by $1,000 or more higher than the average.
  

• For additional information about the FHA 203(k) rehabilitation program, please visit http://www.hud.gov/offices/hsg/sfh/203k/203kabou.cfm 

  Market Matters is published by the CALIFORNIA ASSOCIATION OF REALTORS®, a trade association representing more than 175,000 REALTORS® statewide.
  

Contact me if you are thinking of purchasing a home which needs some extra money put into it to become livable.

If you are interested in finding a home to fix up, anywhere in the Santa Clarita Valley and surrounding communities, email or phone me and ask to be put on my DAILY AUTOMATED SEARCH SYSTEM which will send your personal home search criteria directly to your email in-box daily.  (Click this LINK to see an example of a personal Automated Search Page)

No matter where in the Santa Clarita Valley you are looking, it would be my pleasure to help get you into a property that you can call home!

LeeAnn Bell, REALTOR®
661-309-2364
LeeAnnRealtor@yahoo.com

CalBRE #01260650

Comments Welcome

(c) 2010 LeeAnn Bell  -- updated 2016