Lets us start off with an example on an ideal property and go through the steps involved for a FHA 203K Loan to go through.
Look at the following images for a Florida home that requires repairs before you move in.
This home is a perfect example of a “Handy man special”
This is going to be one that needs extensive repairs. The main thing jumping out from the photos is that it needs the new roof. I’m making an assumption, but I’m guessing that this will be sold “as is” based on the price.
Are you up for the challenge?
We can get this done, but I think that in order to do so, we will need to use the FHA 203k renovation loan. They will allow up to 30k in repairs above the purchase price that will be completed after closing. There are a few hoops that we would have to jump through if we go down that path, but there are a couple of main points:
7 Step Process For FHA 203K Loan
- First we would need to get the home appraised
- Anything that the appraisal states is in need of repair prior to closing will be required to be included in the scope of work for repairs
- If there is any room left in the budget after that, then you would be able to include other repairs/updates to fill out the rest of the budget
- We then need to find a contractor that will do the work
- I will need to work with the contractor to get them credit approved for the loan as well
- The contractor will then make a detailed quote for each part of the job
- We will then send those plans back to the appraiser and have to order a second report
- This report will now assess the future value of the home, based on the scope of work being done
Now, if we do go that route, your down payment would be based on the total amount of purchase price plus the repair amount.
It looks like the taxes on this one are roughly $23.50 a month. If you were to pay the full asking price of $110,000 and you used the entire $30,000 in repairs, your down payment would be $4988, and assuming that your homeowner’s insurance comes in around $125 a month, you could expect an ongoing monthly payment in the range of $872.84, which would include your taxes and homeowner’s insurance.
Hey – if this home appraises for over 200K post repairs, isn’t that a steal!!!
If you need any assistance with a home loan, fill in the form below and lets get started you on your path to your first home.