Often times home shoppers will come across a fixer-upper property that just fits the bill; perfect in every way except that it needs just too many costly repairs to bring it up to acceptable condition. And what’s worse, the buyer has little or no money to pay for the needed renovations. Now there is a way to make it all possible: It’s the FHA 203(k) mortgage. With a 203(k) loan, your buyer can purchase a property in need of repairs and refurbishing and roll the renovation costs into one, easy mortgage loan based on the home’s post-improved value.
For example, if they wanted to buy a house in which the kitchen had been torn out, they could include in the mortgage loan, the cost of new cabinets, counter tops, flooring, a refrigerator, stove, oven, microwave, sink, dishwasher, garbage disposal, and the cost to design and install it. Plus, get up to six months of mortgage payments included in the loan to cover the mortgage payments while they’re renovating.
And the down payment terms are extremely favorable too – they only have to come up with 3.5% of the home’s purchase price and repair costs. For example, if they were buying a house that cost $150,000 and the repairs cost $15,000, their down payment would be just $5,775.
If you have a buyer shopping for a home and seriously considering a property in need of repairs and updates, the 203(k) mortgage can really simplify their purchase. Just make sure that you work with a mortgage lender who is experienced with the 203(k) program.
You can learn more about the 203(k) loan and other FHA loans by contacting an FHA-approved lender. To find a qualified lender in your area who is experienced with FHA 203(k) mortgages, visit online at http://www.hud.gov
April 13, 2012
- FHA suspends a disqualification rule (mysanantonio.com)