A home doesn't need to be a tear down to qualify for one of these loans.  If there is a home you love with a terrible kitchen (nothing functionally wrong just butt UGLY), it's an option for you.  

203K renovation loans are FHA loans (aka 203K Home Loans) that you can purchase and renovate a home with.  They can be used to improve, update and modernize a foreclosed or fixer upper without the need to tap into your credit card line or hard-earned savings.  They can be used to purchase 1-4 family homes and the average time frame for the whole process is 45-60 days. 

Let's explore two quick scenarios.  Similar loan amounts, same appraisal but in one scenario you end up with almost $30,000 more of equity right from the get go.  

Property A:  Originally, 1275 square foot ranch that an addition was added.  The addition added a bedroom and doubled living space.

  • Sales price 325K
  • Cost of Addition 175 K
  • Total loan amount 500K
  • Appraised for 530K
  • Down payment $17,500
  • Equity $47,500

Property B:  2550 square foot colonial, no changes.

  • Sales price 530K
  • Appraised for 530K
  • Total loan amount 530K
  • Down payment $18,550
  • Equity $18,550

Prospect Mortgage is a great company with a stellar team of experts who help guide you through the entire process.  Interested in a FREE Q & A call with one of the experts?  Call me (978 595-8451) and I'll set one up for you.