February 25th, 2014 1:49 PM by Bob Rutledge
With housing prices on the rise again and the inventory of available homes at near record lows, buying a home has become quite challenging for any home buyers but especially first time home buyers with a small budget. If you’re still looking for a sizable home, but don’t want to shell out the big bucks, investing in a fixer-upper house could be a great option for you. With a little bit of work, you could turn a less than perfect house into your dream home, especially if work with an experienced loan officer plus a contractor to do the repairs. However, paying for the house and the repairs might be difficult because many lenders don’t want to finance a house that requires a lot of work. The FHA 203k Renovation Home Loan is the perfect mortgage for those who want to have all the houses listed for sale available to them, won’t settle, dreams of what their home will look like, and is willing to think outside the box. The 203(k) loan includes funds for the purchase, repair/improvement costs, inspection fees, and even six month’s carrying costs.
The program is primarily designed to finance the renovation of homes which serve as the principal residence. Eligible properties are one to four dwelling units that have been constructed for at least one year. The units have to comply with local zoning regulations. Loans might apply to houses moved from one site to another for renovation. Furthermore, also current homeowners can also use the 203(k) loan to refinance existing mortgages. The program has a six-month deadline for completion, though there are extensions available if warranted.
There are two different 203(k) loan options for homebuyers, depending on the scale of the home renovation project. The standard 203(k) program starts with a feasibility study, overseen by an approved consultant, which helps the FHA determine whether the home repairs are justified. Together with the lender, the consultant monitors the project’s progress and conducts a final inspection after completion. The streamlined version is for smaller, less complex projects where no permits, plans or specs are needed. In addition, the homeowners don’t need a consultant and can just use a certified contractor. Below are the basic steps that you need to do if you want to finance your fixer-upper though the 203(k) loan program.