Buying an Older House with an FHA Loan
April 24, 2023
When you want to buy a home with an FHA loan, there are important choices. That can include the type of loan you apply for. Believe it or not, there’s no one-size-fits-all mortgage option and different loans serve different purposes.
What do we mean by this? Sometimes, it’s as simple as noting the age and condition of the house you want to make an offer on. Is it in poor condition? Or does the home appear to be in good repair without major corrections?
It’s easy to get tunnel vision when hunting for the right property. Many buyers ask that old, common question: "Will this house pass the appraisal?”
Choosing the Right Home Loan
Asking whether the home will pass the appraisal is a smart thing to do when you’re buying an existing construction home.
Did you know that sometimes the house doesn’t need to pass an initial appraisal? Buying a home with an FHA 203(k) Rehabilitation mortgage (instead of a 203(b) purchase loan) means the appraisal issues are different in important ways.
For these loans, the appraisal depends on the state of the property once the rehab work is complete.
The newly rehabbed home must pass an inspection process once the repair work is complete, making code compliance one of the goals of the construction work.
Older Homes Made New Again
If the home you fell in love with looks a bit old, in poor condition, or needs some major work to bring it back into compliance with state or local code, you may be in luck having a rehabilitation loan option to fall back on.
Not everyone wants a brand new house, and those willing to consider buying a property with an FHA 203(k) mortgage may have expanded house-hunting options they wouldn’t otherwise be able to take advantage of.
There are some issues to remember about buying and rehabbing older homes. Lead paint and asbestos abatement can be serious and costly, depending on the property. Some older homes may need foundation work, a new roof, and upgraded electrical or plumbing systems.
Some borrowers choose a rehab loan paired with add-ons such as the FHA Energy Efficient Mortgage package, which allows extra loan funds for approved energy-saving upgrades to a home, such as new storm doors and windows, installation of solar energy options, etc.
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RELATED VIDEOS:
Annual Income Requirements for FHA Loans
Good Credit History Helps Get FHA Loans
Stay Informed About Your Mortgage Closing Costs
What do we mean by this? Sometimes, it’s as simple as noting the age and condition of the house you want to make an offer on. Is it in poor condition? Or does the home appear to be in good repair without major corrections?
It’s easy to get tunnel vision when hunting for the right property. Many buyers ask that old, common question: "Will this house pass the appraisal?”
Choosing the Right Home Loan
Asking whether the home will pass the appraisal is a smart thing to do when you’re buying an existing construction home.
Did you know that sometimes the house doesn’t need to pass an initial appraisal? Buying a home with an FHA 203(k) Rehabilitation mortgage (instead of a 203(b) purchase loan) means the appraisal issues are different in important ways.
For these loans, the appraisal depends on the state of the property once the rehab work is complete.
The newly rehabbed home must pass an inspection process once the repair work is complete, making code compliance one of the goals of the construction work.
Older Homes Made New Again
If the home you fell in love with looks a bit old, in poor condition, or needs some major work to bring it back into compliance with state or local code, you may be in luck having a rehabilitation loan option to fall back on.
Not everyone wants a brand new house, and those willing to consider buying a property with an FHA 203(k) mortgage may have expanded house-hunting options they wouldn’t otherwise be able to take advantage of.
There are some issues to remember about buying and rehabbing older homes. Lead paint and asbestos abatement can be serious and costly, depending on the property. Some older homes may need foundation work, a new roof, and upgraded electrical or plumbing systems.
Some borrowers choose a rehab loan paired with add-ons such as the FHA Energy Efficient Mortgage package, which allows extra loan funds for approved energy-saving upgrades to a home, such as new storm doors and windows, installation of solar energy options, etc.
------------------------------
RELATED VIDEOS:
Annual Income Requirements for FHA Loans
Good Credit History Helps Get FHA Loans
Stay Informed About Your Mortgage Closing Costs
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