FHA Mortgage Loan Funds Renovations

Homebuyers who buy an older home or foreclosure often are frustrated by the difficulty of financing needed repairs and renovations. But a Federal Housing Administration home loan program offers some help.

A Section 203(k) loan allows borrowers to wrap the cost of repairs and improvements into a single mortgage.

Find the best mortgage rates

Bankrate can help you find the lowest available mortgage rate.

"We've seen tremendous growth in the use of these loans across the country, especially in areas where the housing stock is old and needs repairs or when people are buying foreclosures and short sales," says Stephen Adamo, president of Weichert Financial Services in Morris Plains, N.J.

The 203(k) loan is a boon for cash-strapped homeowners who either cannot or do not want to tap their home equity. It also offers an alternative to borrowers struggling to find other sources of financing.

"This is a great loan product because it can be very hard to find a construction or rehabilitation loan these days," Adamo says.

There are two types of 203(k) loans. The first, and more common, loan is known as a Streamline 203(k) and is restricted to repairs or improvements that total $35,000 or less.

The second type of 203(k) loan applies to improvements costing more than $35,000.

More here:
FHA Mortgage Loan Funds Renovations