In this instance, a good financing solution is an FHA Streamline Renovation Loan, called the FHA 203k. With this program, the renovation loan is rolled into the entire financing package… one loan includes the renovation loan and the cost of purchase.
Changes to FHA guidelines along with new higher loan limits make the 203k the best choice for many types of home loans:
- Get up to $35,000 of loan proceeds to make needed upgrades or repairs.
- Appraisal and loan value are based on the home value after completion of repairs.
- The loan closes before work begins.
- Repairs and remodeling must be completed within six months.
- Use the funds for a variety of repairs and improvements, fom roofing to flooring to appliances – virtually anything but furniture.
- Down payments as low as 3.5%.
- Qualifying requirements are less stringent than conventional loans.
How the FHA 203k program can be used
The FHA 203K program can be used to accomplish rehabilitation and/or improvement of an existing one-to-four unit dwelling in one of three ways:
- To purchase a dwelling and the land on which the dwelling is located and rehabilitate it.
- Purchase a dwelling on another site, move it onto a new foundation on tehmortgaged property and rehabilitate it.
- Refinance existing indebtedness and rehabilitate a dwelling.