Almost everyone at one point or another has taken a look at a “fixer upper” home on the market and visualized how great it would look after a little (or a lot) of work. However, buying a damaged or rundown home can be tricky, as banks want to lend their money toward a sound investment. This leads some people to take out a bridge loan to finance repairs before they obtain a traditional mortgage. This can be detrimental to their cash flow, as short-term loans usually come part and parcel with high interest rates. However, the Federal Housing Administration (FHA) is currently promoting an interesting program called the 203k Rehabilitation Loan Agreement that can finance both the land, property, and repairs in one fixed– or adjustable-rate long-term mortgage.
The housing in question must be a one- to four-family dwelling at least one year of age. It must adhere to all zoning codes, and any newly constructed outbuildings must be attached to the original structure. It applies to houses, condominiums (with restrictions), and even multi-use properties–if the commercial use is restricted to a certain percentage of the dwelling, and the funds are used only for the residential portion.
Cheering Up Depressed Neighborhoods–FHA’s 203k Rehabilitation Loan Agreement
The size of the mortgage is based on the projected value of the house after all improvements have been made. The cost of the work to be done is also factored in. To get more information or to apply for the FHA 203k Rehabilitation Loan, contact an FHA-approved lender in your area.