REALTOR® Magazine-Daily News-FHA 203(k) Loans on the Rise

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Daily Real Estate News | October 29, 2009 | FHA 203(k) Loans on the Rise
The FHA-backed 203(k) rehab loan is an increasingly popular option in today’s market because so many available properties – especially foreclosures – are in need of repair.

A streamlined 203(k) provides money to pay for improvements such as a new roof, appliances, furnace, energy-efficient windows, and cosmetic improvements like carpet, paint, and remodeled kitchens and baths.

The maximum loan available is $35,000. The buyer must put down 3.5 percent of the acquisition plus repair costs. At closing, the seller is paid and the remaining money goes into an escrow account to pay for repairs.

A licensed contractor must complete the work within six months. Some lenders allow the borrower to do minor cosmetic work like painting themselves.

Source: Minneapolis-St. Paul Star-Tribune, Lynn Underwood (10/25/2009)