You’ve found your dream home. Only one problem: Its foundation is sinking and it needs a new roof. The purchase price is right, but you’re worried that you’ll never be able to afford all those repairs.
Here’s some good news, though: The Federal Housing Administration (FHA) offers a loan product designed for buyers who want to purchase and renovate a fixer-upper.
An FHA 203k loan lets you borrow enough money to not only buy a fixer-upper, but to repair it, too. So if your home costs $150,000, and contractors estimate that you’ll need $50,000 to modernize an outdated kitchen and repair a leaking roof, you’ll be able to borrow enough to both buy the home and fund repairs.
Here’s how it works: Say you come up with a down payment of $5,250 on the $150,000 home. That would leave you with a mortgage loan of $144,750 with a typical loan product. With an FHA 203k loan, though, you can add in contractors’ estimated cost of repairs. You, then, could borrow $194,750 to cover both the purchase of the home and the needed repairs.
If you’re in the market for a home that needs some TLC, give us a call. We’re happy to discuss the FHA 203k program with you. We can help you determine if the program is a good fit for you and the home you want to buy.