Did you find a great house that needs a little TLC? Rather than get a mortgage for the house and another for the rehab, you can combine them into one with the U.S. Department of Housing and Urban Development’s (HUD) 203(k) program. Section 203(k) insures mortgages covering the purchase, refinancing or rehabilitation of a home that is at least one year old. A portion of the loan is used to pay the seller, or if a refinance, to pay off the existing mortgage, and the remaining funds are placed in an escrow account and released as rehabilitation is completed. The cost of the rehabilitation must be at least $5,000. Section 203(k) insurance enables home buyers and homeowners to finance both the purchase (or refinancing) of a house and the cost of its rehabilitation through a single mortgage, or to finance the rehabilitation of their existing home. Section 203(k) insured loans can finance the rehabilitation of the residential portion of a property that also has nonresidential uses; they can also cover the conversion of a property of any size to a one- to four-unit structure. Applications must be submitted to the local HUD Field Office through an FHA approved lending institution. 8,000 homes took advantage of this funding. The budget for this program is $900,000,000. (14.108 Rehabilitation Mortgage Insurance 203k) For more information contact your local HUD office or check out the program online at http://www.hud.gov/offices/hsg/sfh/203k/203k–df.cfm
Income Eligibility: None, but must be able to make monthly mortgage payments.
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