Thinking about buying a fixer-upper? With an FHA 203(k) rehabilitation home loan from Mortgage Connect you can finance a variety of repairs into your loan.
Buying a house that needs rehabilitation can often be a complicated and costly process. Repairs can drain your savings or investments. Interim acquisition and improvement loans often have relatively high interest rates, short repayment terms and a balloon payment. An FHA 203(K) Standard loan can save you time and money because it combines the purchase cost and the repair cost into a single fixed-rate or adjustable-rate mortgage.
An FHA 203(k) loan may allow you to consider a home that needs rehabilitation if you’re looking to purchase. With this type of loan, you may benefit from lower interest rates and costs associated with repairs and modernization as compared to financing repairs through other methods like home equity lines of credit, credit cards or personal loans. The interest you pay on your mortgage may be tax deductible, and repairs aren’t stretched out over months or years. You can customize the home to meet your needs. Improvements may also increase home value and resale marketability. However, more parties and steps are involved with FHA 203(k) loans, including appraisers, consultants, contractors, and inspectors. Additional costs may apply.
The property must have been completed for at least one year.
Homes must be occupied by the owner. No second homes or investment properties. Transaction must be a purchase loan or refinance. Identity of interest (buying from a relative or business partner) is not permitted. Loans are subject to certain appraisal and construction requirements
The FHA 203(K) Standard home loan requires a minimum of $5,000 in repairs but has no maximum limitations (appraisal required). A HUD consultant and one general contractor will be required.
Eligible major structural repairs include:
Eligible non-structural repairs include: