The 203K Renovation Loan program has been around since the late 1960′s and the general parameters of the program have really not changed much. But until recently, they have not been a viable solution in our market as historically, the maximum FHA loan amounts have been much lower than the current maximum of $729,750. Because of this increase, and the decrease in property values, these loans are now an opportunity for buyers who are looking for either a FHA loan (3.5% down) or a conventional loan (20% down).
Renovation financing is a single loan transaction meaning that the home loan and the renovation loan are packaged together so you are making just one payment to the lender. These loans allow a buyer to purchase a property AS-IS, regardless of it’s current condition and then provides funds for renovation, repairs, and/or upgrades. The lender uses the “after-renovated” value to help determine the final costs, loan amount, and down payment. Also, because it is an AS-IS sale, the seller does not have to make any repairs prior to closing.
This could also be a way of purchsing a short sale or bank owned property that is in such disrepair that a lender wouldn’t even allow a loan to be taken out on the property. It is also my understanding that the renovation loans are availabe to investors who are not even planning on occupying the home.
If you are thinking of buying a home and need money to make repairs or updates, this is a great opportunity. I’m not an expert in financing but I can get you the name of someone who is to find out more. Also, if you need help finding that next home, call me at 650-703-2089 or email sgulick@cashin.com.
