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One of the best kept secrets in lending is about to gain a tremendous amount of press. This type of FHA 203K Mortgage is not restricted by the $35,000 cap and it will become more popular as the so called “ghost inventory” starts to get released.  These loans are also extremely helpful for homes that are 20+ years old and are in desperate need for updates.

As lending professionals many times we don’t make it a priority to go out and see what some of the foreclosed properties look like. I had an opportunity to take a tour with one of my Realtor partners and realized first why asset managers are eager to sit and wait for the cash offers to come in even if they are lower than the ones that are contingent to FHA guidelines. In some cases all it takes is opening the front door and realizing the smell of rotted wood, carpeting, or other items that have been neglected simply due to lack of maintenance. In other cases the problems go way deeper than that. Some homes also have cracked slabs, bathrooms and kitchens that require a complete makeover or, in some cases, the buyer would simply like to have an addition added to expand from a 2 bedroom to a 3 bedroom home. Regardless of the situation, as these cash buyers start to run out of funds and more homes start to flood the market the FHA rehab loan are bound to gain more popularity.

To get full details of the guidelines visit the HUD website that describes the guidelines for these loans in greater detail. The key items to keep in mind are:

1)         County loan limits still apply

2)        There is only a need for ONE “after-rehab” appraisal

3)        The work to be done can includes major landscape work, detached garages and other cosmetic work

4)        Work can include conversion from a single family residence to a two to four family property and vice versa

5)        Energy efficient improvements are eligible

There are a significant number of other benefits of these loans offer to the prospective home owner so please make sure to visit the HUD website or call your trusted Mortgage Professional.