Financing a Rehab Property Purchase in Long Beach CA
When buying a rehab property in Long Beach CA a major concern is where is the money to rehab the property coming from? Conventional mortgages only lend on the as is value of the property. If you don’t have the money you then need to get a separate loan for the rehab project. These loans are usually shorter term and higher interest than your purchase mortgage. The FHA 203K loan offers you an alternative.
The FHA 203K loan is a single loan that covers both the purchase and the rehab of Long Beach CA properties. The terms of the loan are the same as for any FHA purchase loan. This makes the loans both safer and more manageable for the borrower.
The lenders are also protected by the FHA insurance when they make a loan on a Long Beach CA rehab property purchase. All of this combines to provide a long term solution to the cost of rehabbing the property.
The FHA 203k loan may be combined with other programs such as HUDs HOME, HOPE and Community Develop Bloc Grants. Local and regional programs can also be combined with the FHA 203k program
The maximum FHA 203k loan depends on the ability of the parties to pay and the value of the property after rehabilitiation. As is appraisals are not required by the FHA but may be required by the lender.
The Requirements for the FHA 203k loan are that
- The property be your primary residence
- The property be a 1-4 unit
- Funds may be used to increase or decrease the number of units in the building
- If new units are constructed they must be attached to the existing structure.
- The home be at least 1 year old
- The minimum repairs are at least $5,000.
- The loan not exceed the FHA limits for the area
- The loan not exceed 110% of the value of the property after rehabilitation
- The work commence within 30 days of close of escrow
- Homes that are demolished or have been razed are eligible if some of the existing foundation stays in place.
The rehabilitation funds are placed in an escrow account and disbursed to the contractor as the work is completed.
EligibleImprovements on a Long Beach CA Rehap Property for the FHA 203K loans include:
- Room additions
- Updating rooms
- Building decks
- Luxury items are not included in FHA 203k financing
- All safety, health and energy conservation items must be addressed first.
We can help you get an FHA 203k loan for the purchase of a Long Beach CA rehab property