Ive found the house I want, but it needs a lot of repair. Can I borrow money for both the mortgage and the repair?
You love the house, but it needs work, and all your cash is going toward the down payment. Now, with a special government program, you can apply for a buy-and-repair loan to borrow enough to fix up the house as well as buy it. The program, which is the Federal Housing Administration's 203(k) loan, rolls the cost of repairs into the mortgage.
Under this program, buyers may be able to purchase a fixer-upper with as little as 3.5% in down payment. And recent changes in the program make it more user-friendly including a reduction in mortgage insurance costs and streamlining the approval requirements.
Qualified repairs, which must total at least $5,000, can include re-roofing, replacing windows, replacing a water heater or furnace, energy improvements, landscaping and providing handicapped access. Be sure to ask about local loan limits for this program, the same as for other FHA loans.
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