Where to Find Funds for Fixup
Buying a fixer upper home is a great opportunity if you have, or can find, the money needed to complete the work. There are a number of ways to go about finding the funds.
Finance the Fixup
The Department of Housing & Urban Development (HUD) 203k Loan is the “big dog” in home fixup loans. It’s a loan for the purchase of the home and a loan for fixup costs as well. It can be complicated, but here are the basics:
- First, the lender provides the funds needed to purchase the home.
- Then, you complete documents showing what you’d like to fixup and cost estimates.
- Next, the lender provides funds to pay for fixup as it gets completed.
- Although a contractor is not technically required, you have to be deemed “qualified” in order to do work yourself.
- All required health, safety, and energy efficiency improvements must be completed first.
- $5000 or more in improvements is required & work must be done within 6 months.
Checkout our Blog “How does a 203k Fixer Upper Loan Work” for full details on the 203k.
Some local banks and credit unions also offer their own “rehab” loans which operate similarly to the 203k.
Fannie Mae’s Homepath Program makes buying a fixer upper home easier by financing fixup expenses on many of its “bank owned” properties.
Grants for Fixup
The HUD Neighborhood Stabilization Program began in 2009 and is worth checking into if you are very patient and willing to work through the red tape. It gives funds for down payment, closing costs, and/or fixup in targeted areas.
Some local organizations have grants and homeownership assistance programs that provide funds for fixup. Checkout our “Local Info” tab for your area.
Our Lesson Finding Down Payment Cash will give you additional ideas of places to find funds.
One great way to get home fixup paid for is by finding a motivated seller. You may have to make offers on a number of fixer upper homes to determine which sellers are motivated, but there are sellers who are willing to make repairs if you buy the home.
The amount you can borrow for the home and for fixup is limited so talk to a qualified Mortgage Professional.
Thinking of buying a home in the Portland, Oregon area? Checkout our First Time Home Buying Classes!Finding Cash for Fixup,
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