Buying a home that needs some attention can be a good choice for buyers who want to build up a lot equity through improvements. Some buyers are undaunted by a fixer. But they do require more work, planning, time, and patience. Financing the rehab can be confusing, but we have helped many buyers with this type of project. In the end it can yield very satisfying results if you are up for the challenge. Let’s look at the basics.
What is a 203k Loan?
An FHA rehab loan that lets you finance the home sales price and renovation cost with only 3.5% down. With a traditional FHA loan if you were buying a $100,000 house, your down payment would be 3.5% ($3,500) and you would be responsible for closing costs. The 203K Rehab Loan works almost the same way except that it allows you to finance renovation cost as well. If you found a $50,000 home that needed $50,000 of work, the 203K mortgage would allow you to make the same 3.5% ($3,500) down payment based off of the total $100,000 project cost.
The most important aspect of the process is finding a great contractor, experienced mortgage company, and knowledgeable realtor. And the right home, of course.
419 Marion – Ripe for Rehab
Listed at $170,000, 419 Marion is in a great Webster Groves location but in need of work. It is being sold AS-IS. The house has great bones. The after improved value of this home is around $400k+. It is a project with much potential.
- 203k Loans Explained
- Everything You Need To Know About Home Construction Loans
- FHA 203k Loan – Rehab Loan Benefits, And Some Downsides
Contact us if you have questions about construction loans or about this home in particular. We have experience in this area and can recommend several additional resources to help with process. We love to see homes transformed!