An often overlooked FHA loan  will allow buyers to not only purchase foreclosures but it will also pay for repairs and upgrades.

The FHA’s 203(k) program has been on the books for decades but over time it’s been rarely used. That’s changed recently, in part because the program is ideal for many foreclosure buyers.

With the 203(k) program buyers can get financing to purchase or refinance an existing home (it has to be at least a year old) plus additional dollars to fix it.  The construction money is provided in draws as the repair work is completed after closing.

This program, of course, works perfectly for foreclosure buyers because it covers both the cost of acquisition as well as the expenses that may be required to improve the property’s condition.

In order to qualify, buyers must reside in the property…therefore it must be a personal residence or an investment with multiple units and the buyer must reside in one of those units.

A benefit of the 203(k) program for those wanting to repair a home is that they can use one loan vs two which keeps the overall cost cheaper as there is a single settlement and thus only one set of closing costs, origination fees, taxes, etc.

Not all improvements can be financed under the program and the maximum available for repairs in $35,000.

For more information regarding the 203(k) program, contact us and we will put you in touch with one of our preferred lenders specializing in this program.