FHA Renovation Loans are now Available

If you have been looking for homes lately in the Cedar Rapids area, I’m sure you have seen one with great structure, but is run down and out of date. You’d like to purchase it, but funds to rebuild are hard to find.

What are your options?

The Federal Housing Administration (FHA) now provides 203k Rehabilitation Mortgage Insurance loans which cover the purchase AND up to $35,000 renovation for single homes, multi-plexes up to 4 units AND condos. The total loan amount is based on the property’s appraised value once the repairs are completed. The down payment requirement is 3.5 percent.

According to hud.gov, this program can be used to accomplish rehabilitation and/or improvement of an existing one-to-four unit dwelling in one of three ways:

  • To purchase a dwelling and the land on which the dwelling is located and rehabilitate it.
  • To purchase a dwelling on another site, move it onto a new foundation on the mortgaged property and rehabilitate it.
  • To refinance existing liens secured against the subject property and rehabilitate such a dwelling.

These home loans are available for homeowners only and not for investors.

Homeowners must live in the property, but some borrowers have used a 203(k) loan to buy and renovate a multifamily property, live in the property for a year or so, refinance into a conventional loan, and then sell the rehabbed property.

The interest rates are higher than the other FHA loans and private mortgage is required.

You can’t use the loans to build pools, but it can be used to repair an existing pool. After you close on your home and your loan, you have six months to complete the projects covered by the loan.

If you’re interested in more information and a list of great homes in the Cedar Rapids and surrounding area, call me today at (319)480-5262!