Mortgage options for potential money pit
Dear Dr. Don,
How do I qualify for a mortgage on a home that needs work? Do I need really good credit and a lot of money down?
© Elena Elisseeva/Shutterstock.com
— Ron Rehab
Here’s a case where the government can be your friend. As it turns out, the Federal Housing Administration’s mortgage loan insurance program is something you should investigate. The federal program allows homebuyers (people like you) to finance the purchase price of a home and the cost of renovating it all at once. Specifically, this is the Section 203(k) Rehab Mortgage Insurance program.
There’s a limit to the funding
The total value of the property can’t exceed the FHA mortgage limit for the area. The Streamlined 203(k) program allows a homebuyer or homeowner to finance up to $35,000 to repair, improve or upgrade a home.
Why FHA is particularly helpful
In general, FHA loan underwriting standards have lower down payment requirements than conventional mortgages. You can also qualify with lower credit scores. The FHA’s website says, “All persons who can make the monthly mortgage payments are eligible to apply.”
Sounds like a good match for your needs. Good luck!
Get more news, money-saving tips and expert advice by signing up for a free Bankrate newsletter.
Ask the adviser
To ask a question of Dr. Don, go to the “Ask the Experts” page and select one of these topics: “Financing a home,” “Saving & Investing” or “Money.” Read more Dr. Don columns for additional personal finance advice.