Rehab Financing Program

So you’ve found your dream house, but there’s one small problem.  It could stand some sprucing up, but you don’t have the cash to buy it and renovate it.  That’s where the FHA’s 203k financing program can help.  There is no doubt that as homeowners walk away from houses they can’t afford there will be a certain amount of deferred maintenance that new homeowners will face.  So the FHA is offering up to $35,000 to take care of those needed improvements whether it’s a home you want to purchase or a home you already own and plan to refinance.  Here are the basics:

1. May be used for the purchase or refinance of one-to-four (single family) residences including HUD REO (means “real estate owned”) properties.
2. The loan can be an adjustable or fixed-rate mortgage.
3. The funds to purchase or refinance are combined (and pays off existing liens) with the funds needed to repair or rehabilitate the property. Repairs are completed after closing but you can’t do a “cash-out” refinance.
4. Instead of two separate closings for two loans, the rehab funds are lumped into a single escrow.
5. The money can be used to update a home, handle safety issues or pay for a big ticket item you need (like a new paint job or a roof).
6. Same rules apply in terms of appraisals, property values must be sufficient to make the loans and the buyer must have the means and credit eligibility to get the loans.
7. Sorry, but investors are not eligible (including REO sales).