Buying an Older Home with an FHA Mortgage
But some buyers want either a fixer-upper or are looking for an older home in a style that isn’t trending. Is there an FHA mortgage for these borrowers?
FHA Purchase Loans
The standard FHA 203(b) purchase loan may be right for some borrowers who want an older home, but there are caveats.
FHA loans require the property to be up to code at loan closing time, so if there are serious issues with the roof, the plumbing, or the foundation, you’ll be required to have those corrections as a condition of loan approval.
You won’t typically be allowed to delay those corrections. They will likely be required to happen within a certain time frame.
If you buy an older home with an FHA purchase loan, consider your options more carefully if the property is on a historic register, requires special maintenance to keep original facades or other features, etc.
Likely, you won’t be able to use FHA loan funds to do this. Consult with the seller and your loan officer to make sure you know what your responsibilities might be for purchasing a home that has any kind of historical significance in the local area.
It’s true that most borrowers won’t have this issue, but those who do should consider taking extra time to understand these issues properly.
Buying with an FHA Rehabilitation Mortgage
The FHA 203(k) Rehabilitation Mortgage may be a good choice if you choose an older home needing extensive repairs.
These loans are intended to simultaneously purchase and renovate a property with the understanding that the home will meet local code and FHA minimum standards once the renovation work is done.
A 203(k) loan could help to purchase a home that would not qualify for an FHA mortgage under the 203(b) program mentioned above. It can be used to buy and rehab or refinance and rehab a qualifying home.
Ask a loan officer to compare both the FHA 203(b) and the FHA 203(k) mortgage options for you side-by-side to learn which might be the better option for you, depending on the type of house you want.
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