A Little-Known Loan Program for Fixer-Uppers

There’s a way to make essential repairs and add other upgrades without dipping into savings or taking out a home-equity loan. The Federal Housing Administration’s 203(k) rehabilitation program provides for loans covering renovation costs as well as the purchase price of a primary residence — investors excluded — and it allows for just a 3.5 percent down payment. Although the program has been around since 1978, it is not well publicized, and many borrowers mistakenly think they have to buy a wreck in order to qualify. “It just has to appraise below market value and then at market value with the repairs.” The program also applies to many historic and older houses as well as short sales and bank-owned homes. HUD outlines the rules on its Web site. Home buyers must put down at least 3.5 percent of the current value of the property and use a HUD-approved lender, appraiser and a contractor approved by the lender for the repairs. See NY TIMES: http://www.nytimes.com/2010/10/17/realestate/mortgages/17mort.html?hpw