Some of the best opportunities for homebuyers to secure a “big time” deal in today’s housing market often gets trumped when an appraisal comes back requiring a major item to be addressed and repaired; or the home requires extra repairs that exceed the homebuyer’s budget after their down payment. An FHA 203k reahb loan is ideal for the rehabilitation of homes that need work: HUD owned homes, short sales, or REO (bank owned), and any other properties. Basically, the FHA 203k rehab loan program is nothing more than a FHA mortgage and a home improvement loan tied into one, 30-yr fixed mortgage loan. The 203k rehabilitation loan program is also a great tool for community and neighborhood revitalization.
Why Do I recommend the FHA 203k Rehab loan to my buyers?
(1) The home is being sold “As-is” typically from the bank as a REO or short sale property, and is required to sell without repairs. In this case, the home would not pass the appraisal inspection for a conventional or regular FHA or VA home loan, and a cash purchase is the only other option.
(2) Most homebuyers simply do not have the additional money on top of their down payment to put the repairs or upgrades into the home.
Some additional benefits for choosing the FHA 203k Rehab Loan are:
(1) Low down payment required – 3.5% down
(2) Lenient credit score requirements
(3) Borrower can receive gift funds from family for the down payment
(4) Non-occupying co-borrowers are allowed
(5) The seller can still pay up to 6% toward closing costs and prepaid items such as taxes and insurance
(6) Owner-occupied financing for up to 4-unit properties, PUD’s and condos
(7) You can borrow up to 110% of future appraised value
There are many other great reasons why this loan program is a great choice, especially in the REO, short sale, and foreclosure market that we are in today. If you are looking for a fixer-upper, be sure to ask me about this amazing product.
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