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Want a home, But it needs repairs? Look into HUD’S 203(k).

The FHA, as part of the Department of Housing and Urban Development (HUD), is an administrator of several single-family mortgage insurance programs. The Section 203(k) is its primary program for single-family properties in need of repair and rehabilitation and is an important aid in the revitalization of neighborhoods.
Usually when someone wants to buy a home in need of repair they have to first get financing for the property, then additional financing for the rehab work and, after the work is completed, secure a permanent mortgage. Usually these interim loans have high interest rates and short periods of amortization. The 203(k) addresses these types of situations with a single financing tool. Typically, the rates can be either adjustable or fixed and are based on the projected value of the property after rehab.
How it can be used:
• To purchase a house — and the land that the house is on — that needs rehabilitation
• To purchase a house on one site and move it to another site with foundation in place and rehab it
• To refinance existing loans against a property and rehab the dwelling
To Be Eligible:
• Must be a  1- to 4-family dwelling at least 1 year old
• Number of units must conform to local zoning requirements
• Demolished homes or homes to be demolished must have existing foundation remains in place
• Can be used to convert single-family homes into multi-family homes of up to 4 dwellings
• Can be used to convert multi-family dwellings to 1- to 4-family dwellings
• An existing home on another site can be moved to another property
• May be used for mixed use properties with certain restrictions:

  • 1-story buildings, no more than 25% commercial
  • 2-story buildings, no more than 49% commercial
  • 3-story buildings, no more than 33% commercial
  • Commercial use can’t pose a safety or health risk
  • Funds can only be used for residential areas

• Can be used for individual condo units with restrictions
• Owner/occupant and qualifying non-profit owners only, NO investors
• Rehab is limited to the interior only
• No more than 25% of the total units can be under rehab at one time
• Maximum mortgage amount cannot exceed 100% of after-improved value
• Homebuyers who purchase a property with cash can refinance under 203(k) within 6 months of purchase

For more information on this valuable financing tool and access to required forms visit:
http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/203k/203kabou
or contact one of your local FHA-approved lenders.

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