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Use a 203k FHA loan to buy a Sacramento HUD Home

Use a 203k FHA loan to buy a Sacramento HUD Home

If you are looking to buy a home in Sacramento this year… Consider using a 203k FHA Loan!
Through HUD and the Federal Housing Administration (FHA) 203(k) mortgage program, borrowers can purchase a home and include the costs to rehabilitate and repair it in the same loan. 

These rehab loans are great for:

• Are interested in purchasing a property that needs repairs
• Want to save time and money by financing the purchase or refinance with the cost of the repairs
• Properties that may not qualify for a conventional loan
• First-time home-buyers
• Home buyers who have credit blemishes or low credit scores
• Home buyers who have limited cash for down payment or closing costs

The 203k loan offers borrowers an affordable, stable financing solution that combines the purchase of the home along with the costs of the improvements into a single loan:

• Standard FHA guidelines apply
• Opportunity to borrow against the value of the home after improvements
• Low down payment requirements
• Flexible credit qualifying – low credit scores OK!
• Fixed-rate and adjustable-rate mortgages up to 30-year terms
• Fully assumable loans to qualified borrowers
• Owner-occupied 1-4 unit properties, PUDs, condos, and REO properties

Eligible improvements include:

• Alterations and reconstruction like structural damage, chimney repair, bath installation, skylights, finished attics and basements
• Improve function and modernize – Remodel your bathroom or kitchen, install new permanent appliances
• Improve your home’s aesthetic appeal – Get rid of the shag carpet and avocado stove, add a covered porch, get new siding
• Overhaul or replace plumbing, heating, air conditioning and electrical systems
• Install, repair or replace well or septic systems, or connect to municipal resources
• Repair the roof, repair or install gutters and downspouts
• Flooring, carpeting and tiling – Install hardwood floors in the kitchen, new tile in the bathrooms and carpet in the living room
• Energy conservation improvements – Install double-pane windows, replace your old thermostat with a digital model
• Major landscape/site improvement
• Make your home handicap accessible
• Add an attached/detached garage
• Make up to $1,500 in repair to an existing swimming pool
• Room or garage additions
• Kitchen or bath remodels
• Finished basement or attic
• Patios, decks, or terraces
• Roofing and landscaping
• Safety, energy efficiency, and electrical upgrades
• In-ground swimming pools
• Handicapped accessibility

Flexible Down Payment and Source of Funds 

• Minimum $5,000 rehabilitation amount 3.5% minimum down payment required
• Checking, savings, or other depository accounts
• Proceeds from 401(k)
• Gift from relative, fiancé or domestic partner
• Cash-on-hand

Application Process

1. Home-buyer locates property and signs a sales contract (purchase subject to home inspection)
2. Home-buyer schedules an inspection with a 203(k) cost consultant to budget the iimprovements- Need a FHA Approved Consultant unless a Streamline 203k product.
3. Once budget is approved by borrower, cost consultant completes the work write-up and prepares contractor bid packages to obtain cost estimates
4. Appraiser uses work write-up to determine “as-is” and “improved value”- FHA Approved Appraiser Required.
5. Loan closes
6. Construction begins within 30 days of loan closing
7. Project must be completed in six months or less

Here are some 203K Resources:

For information on FHA mortgage insurance programs, visit: http://www.fha.gov/

For information on U.S. Department of Housing and Urban Development, visit: https://www.hud.gov/

For FHA 203K and 203K Streamline program info visit: http://www.hud.gov/offices/hsg/sfh/203k/203kabou.cfm

FHA Approved Consultants: https://entp.hud.gov/idapp/html/f17cnsltdata.cfm

FHA Approved Appraisers: https://entp.hud.gov/idapp/html/apprlook.cfm

I hope you found this information useful!  Remember Sacramento HUD Homes are owned by HUD (Department of Housing and Urban Development) who oversees FHA (who offers the 203k loan program). You will find it’s difficult to get offers accepted using this loan program on traditional home sales… but HUD wants to see these home rehabbed and back into home ownership and encourage you to use this program! Just another reason why you should be looking at HUD homes in 2011.

Would you like to schedule an appointment to come into my office and meet with me to see how I can get you into a home this year?… Please give me a call (916) 585-3858 or send me an email to erinnewington@kw.com !  I can show you how I can save you money and help you get a deal on your next HUD home purchase!

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Erin Newington
HUD Approved Realtor
Keller Williams Realty
(916) 585-3858
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