FHA mortgage loans are issued by federally qualified lenders and insured by the U.S. Federal Housing Authority, a division of the U.S. Department of Housing and Urban Development.
FHA loans are an attractive option, especially for first-time homeowners:
The standard FHA 203(k) loan is used to purchase or refinance a home that needs major rehabilitation, or when the repairs are structural in nature. The standard 203(k) loan is also used when the total renovation costs exceed the $35,000 limit of the 203(k) streamline loan. Also, the borrowers will receive an added layer of protection from the use of a 203(k) consultant. 203(k) Consultants are experts in their field and are used to safeguard against under or over estimating the cost of the repairs.
The FHA Streamline 203(k) is an all-in-one loan used for homes that need minor repairs. It allows borrowers to finance the purchase of an existing home or refinance a home they currently occupy and make improvements or upgrades of up to $35,000. There are no minimum repair costs with the FHA Streamlined 203(k) loan.
Structural alterations and additions (with upfront approval)
Appraisals are $600 and all properties must be inspected by a foundation engineer and receive a certificate. If any repairs to the foundation are needed they must be completed prior to closing.
FHA 203(b) with Repair Escrow is intended to facilitate uncomplicated rehabilitation to a home being purchased from HUD. To qualify, HUD must agree to allow a Repair Escrow per the purchase contract and the appraisal must be marked as "Insurable with Repair Escrows". The funds for the repairs and reserve contingency are borrowed and cannot be more than $5,000 combined. The repair items cannot require plans, consultants, engineers
HUD (the US Department of Housing and Urban Development) has announced a limited-time sales incentive program which allows qualified buyers to buy HUD homes with a down payment of only $100, as long as: