HUD 203K Loans for First-Time Buyers

HUD203K Loans for First-Time Buyers

You may be familiar with the $8000 tax credit currently being offered to first-time homebuyers, and the $6500 tax credit being offered to homebuyers who have already owned a home, but still meet certain criteria. What you may not be as familiar with are HUD203K loans for first-time buyers.

HUD203K insurance (as it is referred to in the official documentation) is actually another financing method. Those who are looking to buy a home can not only purchase a home, they can also combine the purchase price and the cost of rehabilitating the home they wish to purchase in one mortgage.

This means that if you find a house that you absolutely love and know that you can afford, but you are also aware that it needs some rehabilitation. This does not mean that the home must be literally falling down in order for you to be eligible; a minimum of $5000 worth of repairs means you can apply for the loan.

Those who already own a home that itself is needing rehabilitation may do the same thing. As long as there is a minimum of $5000 worth of repairs needed, you are eligible to apply.

How much your mortgage can be is determined by one of two methods. Either the property value before rehabilitation, plus the cost of rehabilitation is considered, or 110% of the property’s appraisal value is considered. Whichever one is the least is the amount your mortgage will be.

HUD203K only applies to single-family dwellings; however, some condominium properties are eligible if they meet other certain requirements. If your home fits the above category, and if you can make the monthly mortgage payment that is quoted to you, you can make an application.

Again, the home must need at least $5000 in repairs. Homes that will need to be demolished or razed as a part of the rehabilitation program are still eligible; however, the original foundation structure must remain intact and in place.

For more information, go to http://www.hud.gov/offices/hsg/sfh/203k/203k–df.cfm