As of late, the word “Denver” has become synonymous with high prices and low inventory. Even with a slight uptick in available homes in the Mile High City, it’s still tough out there for buyers. One option buyers might consider is an FHA 203(k) rehab loan, also referred to as a renovation loan, which allows homebuyers to finance both the purchase of a home as well as the renovation costs through a single mortgage.
A renovation loan is a fantastic option because it allows buyers to finance the cost of improvements into the purchase or refinance of a home, which takes the financial guesswork and frustration out of renovating.
For those who plan to purchase a fixer-upper, an FHA 203(k) loan may be the perfect solution. There are two types of FHA 203(k) loans:
- Limited (formerly called streamline)
- Standard
A limited FHA 203(k) loan is designed for cosmetic improvements and is capped at $35,000. This rehab loan can be used to finance repairs and improvements like a kitchen remodeling or a new paint job.
A standard FHA 203(k) loan can be used for extensive remodeling, but it requires you to hire a qualified 203(k) consultant to oversee every step of the work, from the plans to the finished product.
Although some restrictions and special rules apply, 203(k) loans can be used to purchase and refurbish condos, two-to-four unit properties, and mixed-use properties, in addition to single-family residences and homes in planned unit developments.
There are lots of homes in Denver that require a little TLC, and renovation loan is a great way not only to break into homeownership but possibly turn a diamond in the rough into the home! Contact Metrowest today – we specialize in distressed property sales and would love to help you start the process!