Myth #4: You can't use an FHA loan for a fixer-upper.
Contrary to this belief, FHA loans can indeed be used for properties that need renovations, thanks to the FHA 203(k) loan program.
Key Points to Highlight:
FHA 203(k) Loans: This specialized FHA loan is designed specifically for homebuyers looking to purchase and renovate a property. It combines the cost of the home and the renovation expenses into one mortgage.
Types of Renovations Covered: FHA 203(k) loans can finance a wide range of improvements, from structural repairs and modernization to cosmetic updates. This makes them ideal for both major renovations and smaller projects.
Streamlined Options: There are two types of 203(k) loans: the Standard 203(k) for larger renovations and the Streamlined 203(k) for minor repairs. This flexibility allows buyers to choose the best option for their needs.
Increased Property Value: Using an FHA 203(k) loan can help buyers purchase a home in need of repairs at a lower price and then increase its value through renovations, making it a smart investment.
Qualified Contractors: Borrowers can work with licensed contractors or, in some cases, do the work themselves, providing additional flexibility in how renovations are handled.
