Did you know you could purchase a home and pay for needed renovations all under one loan? Yup, you can buy a fixer upper and cover the costs of the fixes from the mortgage loan. This is perfect for those who maybe qualify for lower priced homes, are looking for a project, investors, etc. Of course there are different types of renovation loans, that all come with their own qualifications and requirements, and since I am not a loan office or mortgage broker, as I've mentioned many times before lol (maybe I should become one 🤔), I will leave it to you to research the different types and what they require.
I will make mention of the one I've recently become familiar with myself. The FHA 203(k) loan. As with the standard FHA loan, you are able to put down 3.5%, however, your credit score does have to be in the mid to upper 600's at minimum, which is higher than the standard FHA loan discussed in a previous post. You are also required to have the property as your primary residence, so no you cannot use this type of loan to buy and immediately flip. You are not required to occupy the residence while the renovations are being completed however, and the renovations cannot begin until after closing, which typically takes 45-60 days.
There are two different types of FHA 203(k) loans, and they of course come with their own stipulations. The two types are Standard and Limited. The differences come in with the amounts that can be used towards renovations, what renovations are and are not accepted, if additions can be added, etc. Your lender will provide a list of these items, along with the other eligibility requirements for both types. As always, if you aren't clear on something, ask your lender for further clarity. Your Realtor may be knowledgeable about a few things, but we generally are not the experts when it comes to loan products. If you are not in direct communication with your lender, pass your questions to your Realtor to relate back to him/her, as your Realtor certainly should be in direct communication with your lender.
I hope the information I provide is actual useful to you all, and I think I've mentioned it before, but if there are things you are looking to gain more knowledge on when it comes to the real estate world, let me know and if I don't have the information, I will get it for you. 😊 Thank you for reading today!
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