The Federal Housing Administration (FHA) has a loan program for rehabilitating homes and communities called the 203(k) Loan Program. Better known as a “Rehab Loan.” This program is meant to encourage new home ownership, rehabilitation of neighborhoods, and communities.
One advantage of this program is that “buyers can focus on the location and floorplan instead of the condition of the home. Using a FHA 203k rehab loan, there is less competition for properties which allows for a more aggressive purchase price.”
To see if you qualify, talk to your lender about this type of program.
FHA’s credit underwriting guidelines are flexible and are advantageous for investor’s or first time home buyers looking to get a good deal on a property. Lenders are also qualifying buyers with 100% financing when used with down payment assistance.
On top of all this, FHA’s guidelines allow the seller to pay all closing costs (up to 6%). Banks are able to provide rehab loans with fixed rate or adjustable rate mortgages. In addition, buyers can receive credit aid from non-occupant co-borrowers.
To learn more about eligible properties, allowable improvements, the loan process and terms, visit FHA 203(k) Rehab Loans. You can also find information directly from The US Department of Housing and Urban Development (HUD).