Have you found your dream home, but the home needs costly repairs? Most people think that properties in need of rehab can only be purchased by investors with a large pool of cash, but this is not true. There are several home loan options for people needing money to fix up properties. Each home loan option allows the owner-occupant to roll the cost of the home and repairs into one mortgage.
1. FHA 203k
The FHA 203k is a home loan with a low 3.5% down payment designed for properties that need major repairs. Unlike other FHA home loans, the 203k does not require the seller to complete required repairs on the property.
2. Homepath Renovation Mortgage
Homepath is a home loan from Frannie Mae that allows up to $35,000 to be used towards home repair. Like the 203k, a Homepath Renovation Mortgage has a low down payment. However, Homepath loans are only available on homes owned by Frannie Mae.
3. Freddie Mac Renovation Mortgages
Freddie Mac also has several mortgages for primary residence renovation. Unlike the FHA 203 and Homepath loans, Freddie Macs allows home owners to use the loan to make additions to their existing property.
There are pros and cons to each renovation home loan option. Like any mortgage, do your research and get prequalified before beginning your home search. With the right property, using renovation home line will allow you to build a considerable amount of equity into your home in a short amount of time!
ABOUT THE AUTHORS:
Evan and Nora have experience renovating properties and selling FSBO. Visit 203khome.com for more information and advice.