Why in the world would anyone want to buy a home in terrible condition, and then spend time and energy rehabbing the property? Well, to put it in a nutshell, it would be to create wealth. Let’s face it, investors flipping houses do it every day! The theory is you buy a house for well below market value, hire a contractor to do the necessary improvements and the total costs are far less than the final value. It’s not that difficult if you’re working with an experienced Realtor and HUD consultant.
Traditionally, to buy a rehab property, you had to have available cash for the purchase, as well as, for the repairs and updates for the property; however, the 203k Loan is making it easier for those interested in purchasing homes requiring rehab, modifications or upgrades.
A 203k Loan is a government insured mortgage that allows borrowers to incorporate the cost of most needed or desired property upgrades into one 30 year-fixed home loan. Additionally, the 203k Loan can be used to finance and rehab single family homes and properties with up to 4 units. This is great news for home owners that want to own a multi-family dwelling, as they can purchase and renovate the eligible property in one process.
Buyers of both single family homes, condominiums, town houses and 1-4 units can take advantage of the 203 k Loan.
203K Eligible Improvements:
The list of eligible repairs is extensive and can include the repair or replacement of roofs, upgrades or new heating and cooling systems, exterior and interior painting, and kitchen or bath remodels. It can also include new appliances, washer and dryer, and new carpeting.
To qualify for a 203k Loan, you will need the same down payment as the standard FHA Loan, which is 3.5% of the total acquisition cost (purchase price plus rehab). This means, the down payment is based on the total amount of the purchase price plus the cost of the repairs you plan to make. Credit scores, debt to income ratios, employment history, and other qualifying factors are similar to those utilizing standard FHA loan programs.
Pat Bowler | Market Leader & Mortgage Consultant
575 Lynnhaven Parkway Suite 101 | Virginia Beach VA 23452 | 757-652-3999
Movement Mortgage, LLC is an Equal Housing Lender. NMLS # 39179 | 877-314-1499. Movement Mortgage, LLC is licensed by the “Virginia Bureau of Financial Institutions” Lic # MC-5112. Interest rates and products are subject to change without notice and may or may not be available at the time of loan commitment or lock-in. Borrowers must qualify at closing for all benefits. “Movement Mortgage” is a registered trademark of the Movement Mortgage, LLC, a Delaware limited liability company.