Where can I go to find free money to rehab a home? Is there such a thing? Explain please (203k).

Asked by Diane G. Jackson, Fredericksburg, VA Mon Jan 5, 2009

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Pat Mulligan,…, Agent, Chesapeake, VA
Tue Jan 6, 2009
There may be some "free money" in the form of interest-free loans for rehabs in certain neighborhoods in certain municipalities. In the current budget crunch many cities and counties are facing, that might be hard to come by, but it doesn't hurt to ask. You can call the local housing authority and ask if they have a ny current programs.

As for 203k loans-- what a blessing! They are FHA loans, same 3.5% (since Jan 1) down payment, and you can borrow the money for the purchase along with the rehab. There is a stream-line version and then the full-blown, depends on the needed repairs/upgrades. You can borrow money to make major renovations or just cosmetics or even put in a pool! The minimum loan on the rehab is $5000. You need to get an approved contractor's estimate of the cost in advance and the money gets paid directly to the contractor as the work progresses. You do get it yourself, and so precludes you from doing the work yourself. You can borrow up to 110% of the AFTER RENOVATION appraisal, as long as you qualify. The interest rate is a little higher than the regular FHA loan, but a lot cheaper than putting the carpet on your credit card, lol!

Ask for a lender referral. Many lenders do not know how to do this loan, but it is not that hard or complicated and most major lenders participate. I like Darlene Brown at Nation City Mortgage, 757-715-LOAN, but you moght want to work with someone closer to home.
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Scott Godzyk, Agent, Manchester, NH
Tue Jan 6, 2009
I dont think there is such a thing as free money to rehab any home. There are loans available such as fha 203k program. Your best bet is to meet with a local and trusted mortgage broker to get prequalified at no cost and see what programs you do qualify for. A good loan officer will provide a variety of programs and explain the pros and cons of each, try and stay away from the internet lenders... good luck with your search.
Web Reference:  http://www.ScottSellsNH.com
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Cindy Jones, Agent, Alexandira, VA
Tue Jan 6, 2009
I don't think you are going to find any "free" money for a rehab. You can apply for a FHAA 203K loan which provides you additional funds as part of your mortgage to make the repairs required to a home your are purchasing.

There are a number of stipulations that go hand in hand with a 203K loan. I would suggest that your read through the HUD information related to a 203K loan to understand some of those stipulations. It certainly does work for home buyers who find a property that is a good value that needs rehab. However it does require extra work and is not "free."


If you need additional information about this specific loan I would be glad to put you in touch with a lender experienced with FHA loans.
Web Reference:  http://cindyjoneshomes.com
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