Buying Foreclosures with a Rehab Loan

By
Real Estate Broker/Owner with CIDER Properties

Since working with HUD Homes, I found out about a neat program that allows homeowners to finance the cost of their repairs into their home loan.  It is called a Rehab loan. 

FHA offers 203(k) financing or also know as a "Rehab loan" enables homebuyers to finance both the purchase of a house and the cost of its rehabilitation through a single mortgage loan.<!-- <cfoutput> --><!-- </cfoutput> -->  The repair amount cannot exceed $35k and must be at least $5k.  It can be used for single family dwellings or 1-4 unit dwellings. 

Repairs can range from structural damage to updating kitchen and baths.  Cosmetic rapairs alone will not qualify for this program. 

The advantages for this program is that it allows homeowners to purchase a foreclosure that needs work and they won't have to use their cash to complete the repairs.  Some disadvantages are that some lenders aren't experienced with Rehab loans because it could take up to 60 days for them to get paid.

If you are a homeowner thinking about purchasing a foreclosure, don't let the need for repairs scare you away.  You have options!

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Rainer
32,260
Sharon Roark
Re/Max Elite - Lexington, KY
Realtor Extraordinaire in Lexington KY
Informative post!
Feb 08, 2008 10:33 AM #1
Rainmaker
222,965
Bob Southard
Solid Source Realty GA - Kennesaw, GA
e-Pro - Cobb, Cherokee, North Fulton
I have heard that these loans are more complicated to do.  Can anybody comment on what is involved with doing the 203k loans?  I sounds like a great program.
Feb 08, 2008 10:53 AM #2
Rainmaker
125,876
Tanya Redic
CIDER Properties - Tyler, TX
e-Pro, SFR
Wells Fargo specializes in Rehab loans.  You might want to have a local Wells Fargo agent visit your office (if you have one nearby).  We now have an office in Tyler, TX.  A Wells Fargo Associate will be speaking at our local NAREB meeting this month.  I am finding that not a lot of buyers are familiar with this program, as well as lenders.  I would recommend it to those who are looking to get more home/land for their money by purchasing a forelcosure.
Feb 10, 2008 06:35 PM #3
Rainer
6,008
Elijah Addo
MortgageFieldRep.com - Duluth, GA

Fantastic post! I am a mortgage consultant for Wells Fargo Home Mortgage. I've been providing renovation financing for quite sometime now. I can't tell you how many home buyers and realtors  were surprised to hear about this program. Until now, hard money lenders and investors were the only people utilizing this program.

 

I actually posted a couple of blogs recently about the process of obtaining a renovation loan.

Feb 23, 2008 01:45 PM #4
Rainmaker
125,876
Tanya Redic
CIDER Properties - Tyler, TX
e-Pro, SFR

Will,

It is my understanding that Wells Fargo is the Master of Rehab Loans.  I was recently at a NAREB Convention and learned that Wells Fargo has Rehab Specialist.  I can't wait to work with a client on a rehab loan.

Feb 23, 2008 02:56 PM #5
Rainmaker
435,573
Mike Young
203kOnLine.com, covering California & most other states - Fairfield, CA
FHA 203k Consultant 707-812-7668

I thought the minimum rehab amount was reduced... anyone know for sure?

Mar 22, 2009 04:34 PM #6
Anonymous
Magda Evangelou

To whom this may concer,

I am writing to you to request/ask how does re hab loans work and how would i be able to get qualified in oreder to buy a foreclosure that i am interested in.

The house is a 2 unit on Staten Island, NY.

Thank You for your cooperation, and i would like to thankl you in advance.

Thank You

Magda Evangelou

Please contact me 718-791-0949

Apr 14, 2009 01:30 PM #7
Anonymous
Monica

Texas also has a Down Payment Assistance Grant right now...could someone use these grants monies combined with the 203(k) loan?

Apr 05, 2010 10:56 PM #8
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Rainmaker
125,876

Tanya Redic

e-Pro, SFR
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