203k Fha Loans Property Rehabilitation Distressed Housing Renovation Financing Mortgages

The Federal Housing Administration’s 203(k) Rehabilitation loan plan offers prospective homebuyers additional incentive to take advantage of the opportunities available in today’s distressed housing market. If you are interested in purchasing a home property with the intention of conducting major renovations, improvements, or repairs to that property, you may be eligible to finance the project by applying for a loan under the FHA 203(k) Rehabilitation plan.

The 203(k) Rehabilitation plan allows the homebuyer to obtain financing that combines into one, fixed-rate mortgage: 1) the purchase cost of the home (as-is), and 2) the assumed costs of the renovating, remodeling, or otherwise rehabilitating the purchased property.

Standard long-term mortgage plans usually require that the homeowner find other means of financing the costs of a rehabilitation project. The 203(k) plan is unique and beneficial because it does not consider the cost of the house at the time of its purchase and the costs required to rehabilitate it as two separate expenses.

The 203(k) plan is perfectly suited for anyone interested in purchasing a “fixer-upper” and turning it into a proud and valuable asset – valuable on a personal level, valuable to its surrounding community, and, not least, valuable as a real financial asset to the homeowner. However, the 203(k) plan is not geared for any specific kind of homeowner, and may well be the smartest mortgage option for anyone who would like to make changes or improvements to a newly purchased home property.

The FHA 203(k) Rehabilitation loan program can be used to convert a one-family dwelling into a two-, three-, or four-family dwelling, thereby allowing the homebuyer to increase the size and earnings potential of the property as a result of the rehabilitation. Under the 203(k) plan, an existing multi-unit dwelling may also be reduced to a one- to four-family unit.

. Property eligibility requirements for a 203(k) Rehabilitation loan include:

* The purchased property cannot have more than four single-family units once rehabilitation is complete.

* The owner(s) must occupy the dwelling, or at least one of its units, as their primary residence

* Luxury items and impermanent improvements are not eligible as a cost of rehabilitation.

* The cost of rehabilitating the property must not exceed $35,000, and must meet a $5,000 required minimum.

For more information, consult your local real estate agent/broker, or visit http://www.hud.gov/offices/hsg/sfh/203k/203kabou.cfm